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Quality Management Practices for Business Services
from a Buyer’s Perspective
D I S S E R T A T I O N
University of St.Gallen, School of Management,
Economics, Law, Social Sciences
and International Affairs
to obtain the title of
Doctor of Philosophy in Management
submitted by
Elmar Holschbach
from
Germany
Approved on the application of
Prof. Dr. Wolfgang Stölzle
and
Prof. Dr. Thomas Friedli
Dissertation no. 3901
Dierkes DWS, Paderborn, 2011
I
The University of St. Gallen, School of Management, Economics, Law, Social Scienc-
es and International Affairs hereby consents to the printing of the present dissertation,
without hereby expressing any opinion on the views herein expressed.
St. Gallen, May 13, 2011
The President:
Prof. Dr. Thomas Bieger
II
Vorwort
Diese Dissertation ist das Ergebnis meiner Forschungstätigkeit als externer Doktorand
am Lehrstuhl für Logistikmanagement der Universität St. Gallen (LOG-HSG). Die
anfängliche Motivation zu dieser Arbeit entstammt Beobachtungen, die ich in ver-
schiedenen Positionen im Bereich der Beschaffung machen konnte. Insbesondere habe
ich den Eindruck gewonnen, dass beschaffende Unternehmen ein intensiveres Quali-
tätsmanagement für zugekaufte Produkte als für Dienstleistungen betreiben. Dies ist
überraschend, da der Anteil industrienaher Dienstleistungen am Beschaffungsvolumen
signifikant ist und sogar weiter steigt.
Ich möchte dieses Vorwort dazu nutzen, mich bei all jenen zu bedanken, die meinen
Dissertationsprozess aktiv begleitet und unterstützt haben.
An erster Stelle sei hierzu mein Referent, Prof. Dr. Wolfgang Stölzle, genannt. Ihm
gilt mein besonderer Dank, da er mir die Möglichkeit eingeräumt hat, als externer
Doktorand bei ihm zu promovieren. Die Konstellation der externen Promotion stellt an
die beteiligten Parteien immer besondere organisatorische Anforderungen. Prof. Stölz-
le war stets dazu bereit, mich bei der Bewältigung dieser Herausforderungen zu unter-
stützen und sie gemeinsam zu schultern. Desweiteren möchte ich mich bei Prof. Dr.
Thomas Friedli für die Übernahme des Koreferats und die damit verbundene rasche
Begutachtung meiner Arbeit bedanken. Insbesondere danke ich auch meinem Projekt-
leiter Prof. Dr. Erik Hofmann, der mich auf Basis seines reichen akademischen Erfah-
rungsschatzes und mit seinen stets konstruktiven Empfehlungen und Anmerkungen
sehr inspiriert hat.
Weiterhin bedanke ich mich bei meinen Kondoktoranden und Kollegen am LOG-
HSG, die mir durch ihre offene und hilfsbereite Art sehr dabei geholfen haben, einige
Klippen im Dissertationsprozess zu umschiffen. Besonders hervorheben möchte ich
hierbei meinen Ex-Kollegen, Kondoktoranden und Freund Jörg Grimm, von dessen
Einsichten, Empfehlungen und Hilfe ich sehr profitiert habe.
Praxisrelevante Forschung in der Betriebswirtschaftslehre ist i.d.R. nur durch die Mit-
hilfe von Unternehmen möglich. Dies war auch bei der vorliegenden Dissertation der
Fall. Daher möchte ich mich darüber hinaus bei den Vertretern aus der Unternehmens-
praxis sehr herzlich bedanken, die trotz ihrer vielfältigen beruflichen Belastungen die
Zeit gefunden haben, das Thema im Rahmen der Fallstudien mit mir zu diskutieren
und den daraus resultierenden Fragebogen zu beantworten.
III
Mein größter Dank gilt schließlich meiner Familie, die mich in so manchem Sturm
meines bisherigen Lebens stets unterstützt hat. Besonders bedanke ich mich bei meiner
Mutter, Maritta Holschbach-Kamps, und meiner Lebensgefährtin, Ágnes Nagy, deren
permanente Ermunterung und wahres Mitgefühl einen entscheidenden Baustein zur
Fertigstellung dieser Arbeit darstellten. Ich habe von ihnen unermüdliche Unterstüt-
zung und großes Verständnis erfahren. Daher möchte ich ihnen diese Arbeit widmen.
Salzkotten, im Juli 2011 Elmar Holschbach
Quality Management Practices for Business Services from a Buyer‟s Perspective
IV
Table of contents
Table of contents ...................................................................................................................... IV
List of tables ............................................................................................................................. VI
List of figures ......................................................................................................................... VIII
List of abbreviations ................................................................................................................. IX
Abstract ..................................................................................................................................... X
1. Introduction ............................................................................................... 1
1.1 Significance of BS and problem formulation ......................................................................... 1
1.2 Services, BS and scope of work ............................................................................................ 3
1.3 Classification of BS ............................................................................................................. 6
1.4 Research overview............................................................................................................... 7
1.5 Research objectives ............................................................................................................. 9
2. Current status of research ........................................................................ 11
2.1 Relevant research on purchasing of services .........................................................................11
2.2 Relevant research on service quality ....................................................................................20
2.3 Relevant research on QM ....................................................................................................27
2.4 Summary of the current status of research ............................................................................32
3. Research methodology .............................................................................. 34
3.1 Research questions .............................................................................................................34
3.2 Positioning and phases of the research..................................................................................35
3.2.1 Positioning of the research ......................................................................................35
3.2.2 Phases of the research .............................................................................................36
4. Publication structure and key results ........................................................ 49
4.1 Paper A: Quality Management Practices for Business Services: A Research Agenda from a
Buyer‟s Perspective ............................................................................................................49
4.2 Paper B: Exploring quality management for business services from a buyer‟s perspective
using multiple case study evidence.......................................................................................50
4.3 Paper C: Comparison of quality management for externally sourced business services ............51
4.4 Paper D: Quality management for business services from a buyer‟s perspective .....................53
5. Overall conclusion .................................................................................... 55
5.1 Summary of the objectives and research questions ................................................................55
5.2 Theoretical implications ......................................................................................................55
5.3 Managerial implications ......................................................................................................57
5.4 Limitations and future research ............................................................................................60
References ...................................................................................................................................62
V Quality Management Practices for Business Services
from a Buyer‟s Perspective
Appendices ...................................................................................................... 79
A Quality Management Practices for Business Services: A Research
Agenda from a Buyer’s Perspective........................................................... 80
A.1 Introduction .......................................................................................................................80
A.2 Background........................................................................................................................82
A.3 Literature review ................................................................................................................85
A.4 Problem formulation ...........................................................................................................90
A.5 Initial propositions and preliminary research framework .......................................................90
A.6 Methodology ......................................................................................................................94
A.7 Conclusion .........................................................................................................................95
References of paper A ..................................................................................................................97
Appendices of paper A ............................................................................................................... 105
B Exploring quality management for business services from a buyer’s perspective using multiple case study evidence .........................................109
B.1 Introduction ..................................................................................................................... 110
B.2 Theoretical foundation ...................................................................................................... 112
B.3 Case study methodology ................................................................................................... 117
B.4 Key findings from the empirical study................................................................................ 121
B.5 Discussion and conceptual model ...................................................................................... 138
B.6 Conclusion ....................................................................................................................... 142
References of paper B ................................................................................................................ 147
Appendices of paper B ............................................................................................................... 155
C Comparison of quality management for externally sourced business
services ....................................................................................................161
C.1 Introduction ..................................................................................................................... 162
C.2 Theoretical background..................................................................................................... 163
C.3 Research hypotheses and methodology .............................................................................. 176
C.4 Results and discussion ...................................................................................................... 179
C.5 Conclusions, limitations and future research ....................................................................... 202
References of paper C ................................................................................................................ 207
D Quality management for business services from a buyer’s perspective .....216
D.1 Introduction ..................................................................................................................... 216
D.2 Theoretical background..................................................................................................... 219
D.3 Research methodology ...................................................................................................... 230
D.4 Discussion........................................................................................................................ 243
D.5 Conclusion ....................................................................................................................... 247
References of paper D ................................................................................................................ 252
Appendices of paper D ............................................................................................................... 264
E Author's Curriculum Vitae ......................................................................273
Quality Management Practices for Business Services from a Buyer‟s Perspective
VI
List of tables
Table 1: Overview of BS in scope ................................................................. 5
Table 2: Summary of selected publications examining differences in
purchasing of services to purchasing of goods ................................. 14
Table 3: Overview of different process models for purchasing of services ....... 16
Table 4: Description of service quality dimensions in B2C contexts and
their assignment to physical context, interaction, and outcome
quality.......................................................................................... 22
Table 5: Summary of selected publications examining the dimensions of
service quality in a B2B environment.............................................. 25
Table 6: QM practices ................................................................................ 29
Appendix A
Table A- 1: Overview of business services in scope ..........................................105
Table A- 2: Description of service quality dimensions in B2C contexts and
their assignment to physical context, interaction, and outcome
quality.........................................................................................106
Table A- 3: Summary of publications examining the dimensions of service
quality in a B2B environment ........................................................107
Table A- 4: Quality Management Practices ......................................................108
Appendix B
Table B- 1: Quality management practices .......................................................155
Table B- 2: Overview of business services in scope ..........................................156
Table B- 3: Selected companies and their key characteristics .............................157
Table B- 4: Selected services and list of interviewees .......................................158
Table B- 5: Interview protocol (shortened version) ...........................................159
Table B- 6: Major findings regarding the design of quality management
practices for externally sourced business services............................160
VII Quality Management Practices for Business Services
from a Buyer‟s Perspective
Appendix C
Table C- 1: Selected empirical studies comparing QM in manufacturing and service companies ........................................................................168
Table C- 2: Selected empirical studies comparing QM in small and large
companies ...................................................................................172
Table C- 3: Response sample composition .......................................................178
Table C- 4: Adoption of QM practices for externally sourced BS in
manufacturing, service, small and large companies .........................186
Table C- 5: Effects of QM practices for externally sourced BS in
manufacturing, service, small and large companies .........................193
Table C- 6: Barriers to the implementation of QM practices for externally
sourced business services in manufacturing, service, small and
large companies ...........................................................................199
Table C- 7: Determinants of QM practices for externally sourced BS in manufacturing, service, small and large companies .........................201
Appendix D
Table D- 1: Response sample composition .......................................................233
Table D- 2: Results of testing the measurement model ......................................238
Table D- 3: Results of testing the structural model ............................................243
Table D- 4: Selected empirical studies supporting the proposed hypotheses ........264
Table D- 5: Measurement scales, items and their sources ..................................268
Quality Management Practices for Business Services from a Buyer‟s Perspective
VIII
List of figures
Figure 1: Structure of the thesis ...................................................................... 8
Figure 2: Research phases ............................................................................ 37
Figure 3: Process of data analysis during the second research phase................. 43
Appendix A
Figure A- 1: Preliminary conceptual model ........................................................ 94
Appendix B
Figure B- 1: Initial research model ...................................................................117
Figure B- 2: The conceptual model...................................................................142
Appendix D
Figure D- 1: Research model ...........................................................................223
Figure D- 2: Structural model ..........................................................................242
IX Quality Management Practices for Business Services
from a Buyer‟s Perspective
List of abbreviations
AVE Average variance extracted
BME Bundesverband Materialwirtschaft, Einkauf und Logistik e.V.
(German Association Materials Management, Purchasing and Logistics)
BMÖ Bundesverband Materialwirtschaft, Einkauf und Logistik in Österreich
(Austrian Association Material Management, Purchasing and Logistics)
BS Business service(s)
B2B Business-to-business
B2C Business-to-consumer
Cf. Confer
Ed(s). Editor(s)
e.g. exempli gratia (for example)
et al. et alli, lat.: "and others"
i.e. id est, lat.: "that is"
IMP Industrial Marketing and Purchasing Group
ISO International Organisation for Standardization
KPI Key performance indicator(s)
m Million
Mgt. Management
ML Maximum likelihood
n/a Not available/applicable
PLS Partial least squares
QM Quality management
RQ Research question
SC Supply chain
SCM Supply chain management
SEM Structural equation modelling
Sig. level Significance level
Std. dev. Standard deviation
SVME Schweizerischer Verband für Materialwirtschaft und Einkauf
(Swiss Association Material Management and Purchasing)
TQM Total quality management
Quality Management Practices for Business Services from a Buyer‟s Perspective
X
Abstract
This cumulative doctoral thesis presents research results on the basic question how
buying companies manage the quality of externally sourced business services. Busi-
ness services are services which are delivered by firms or organizations and bought by
other firms or organizations (Axelsson & Wynstra, 2002).
The importance of business services for economies and buying companies has risen
during the last years. Studies show that the share of business services on a company‟s
total spend is growing. Despite this significance, the purchasing of business services
has not yet received the attention it deserves neither from practitioners nor from aca-
demics. One reason for this disregard is the focus on the purchasing of goods in com-
panies as well as in academic literature.
Some research shows, however, that the quality evaluation of business services is one
of the major concerns of purchasing managers. This is not surprising considering the
peculiar characteristics of services and the positive effects high-level quality of incom-
ing services may have on a buying firm‟s performance. Therefore, this research aims
at discovering how buying companies utilize practices of quality management for their
externally sourced business services, how their usage may affect business performance
and what may be major determinants of their design. To achieve this objective, this
thesis draws upon literature in the areas of purchasing of services, service quality and
quality management. The analysis of this work utilizes a three-phased research meth-
odology. While the first research phase predominantly deals with the description of the
theoretical and practical problem, the second stage provides potential explanations. In
the third phase of research, the previously developed and refined conceptual model
with its related propositions is tested using several quantitative methods of data analy-
sis.
The findings of this thesis suggest that the utilization of quality management practices
for externally sourced business services has positive effects on the buying company‟s
performance and may therefore represent a valuable investment. In particular, the ap-
plication of customer involvement, service design, process management and provider
involvement enhances the quality of incoming business services. Buying companies
should focus their activities for quality management of incoming services on the ones
whose quality failure would represent a critical risk, which embody an important share
of their purchasing volume, are important to the production process or transferred to
the buying company‟s customers.
Quality Management Practices for Business Services from a Buyer‟s Perspective
1
1. Introduction
This cumulative doctoral thesis deals with quality management (QM) practices for
business services (BS) from a buying company‟s perspective. The following sections
illustrate the significance of BS and formulate the underlying problem, define crucial
terms and the scope of work. Furthermore, an overview of the research process of this
thesis and its objectives will be given.
1.1 Significance of BS and problem formulation
The importance of services for economies and companies is significant and still in-
creasing (Axelsson & Wynstra, 2002; Jackson, Neidell, & Lunsford, 1995; OECD,
2000; Schneider & White, 2004). For example, the share of services of the gross value
added in Germany increased from 48.4% in 1970 to 68.9% in 2007 (Statistisches Bun-
desamt, 2009: 10) and the German Association Materials Management, Purchasing
and Logistics (BME) estimates that the ratio of BS to total purchasing volume lies be-
tween 17 and 28% for manufacturing companies (BME, 2005b: 5). Other authors even
suggest that externally purchased services on a weighted average account for more
than half of a company‟s total spend (Fearon & Bales, 1995). The share of these busi-
ness-to-business (B2B) services may increase in the future due to a continuous trend
towards outsourcing and concentration on core competencies (Cox, Chicksand, Ire-
land, & Davies, 2005; Ellram, Tate, & Billington, 2007; Fuller, 1998; Miettinen, Ven-
tovuori, & Hyttinen, 2005; Matiaske & Mellewigt, 2002; Murray & Kotabe, 1999; van
der Valk & Rozemeijer, 2009). In addition, the portion of services on many product
offerings is increasing due to a risen demand for augmented core goods (Nilsson,
Johnson, & Gustafsson, 2001; Wise & Baumgartner, 1999).
Despite the significance of BS for purchasing, most purchasing departments have fo-
cused on the optimization of the supply of goods (Axelsson & Wynstra, 2002; Ellram
et al., 2007; van der Valk, 2008; van der Valk, 2007). Similarly, the academic litera-
ture predominantly has been concentrating on the supply of materials (Bals, Hartmann,
& Ritter, 2009; Cox et al., 2005; Ellram et al., 2007; Smeltzer & Ogden, 2002; van der
Valk & Rozemeijer, 2009; van der Valk, 2008; van der Valk, 2007; Wynstra, Axels-
son, & van der Valk, 2006).
2 Quality Management Practices for Business Services
from a Buyer‟s Perspective
In particular, QM of externally purchased BS (i.e. incoming BS) from the perspective
of a buying company has received little attention so far by academics (Hemsworth,
Sánchez-Rodríguez, & Bidgood, 2008; Hemsworth, Sánchez-Rodríguez, & Bidgood,
2005; Sánchez-Rodríguez & Martínez-Lorente, 2004). Accordingly, the literature on
service quality in most cases has been written from a business-to-consumer (B2C) per-
spective (Bienstock, Mentzer, & Bird, 1997; Fitzsimmons, Noh, & Thies, 1998; Jack-
son et al., 1995; Hernon, 2002; Kong & Mayo, 1993; Niranjan & Metri, 2008; Patter-
son & Spreng, 1997; Woo & Ennew, 2005). The few existing studies on service quali-
ty in a B2B setting mostly analyzed the dimensions according to which customers
evaluate service quality for distinct types of services but not which practices they use
for this evaluation (see, for example, Bienstock et al., 1997; Fehl, 2006; Patterson &
Spreng, 1997).
In addition, the literature on QM has predominantly adopted the viewpoint of a pro-
vider of goods or services, and tried to answer the question how they can improve the
quality of the products or services offered to their customers (Bruhn, 2006; Flynn,
Schroeder, & Sakakibara, 1994; Forker, 1997; Fynes & Voss, 2002; Flynn et al., 1994;
Kamiske & Brauer, 2006; Rönnbäck & Witell, 2008). However, research on the ques-
tion, how companies receiving BS manage the quality of them is scarce (Forker, Men-
dez, & Hershauer, 1997; Fynes, 1999; Fynes & Voss, 2002; Molina-Azorín, Tarí,
Claver-Cortés, & López-Gamero, 2009; Stanley & Wisner, 2001).
The little research examining QM practices used by purchasing departments solely
considers manufacturing companies receiving goods as unit of analysis and has been
limited to perceptions of purchasers regarding a reduced set of QM practices (Hems-
worth et al., 2008; Hemsworth et al., 2005; Sánchez-Rodríguez & Martínez-Lorente,
2004). These studies may, however, neglect the particular characteristics of services
and their impact on the adoption of QM practices by buying companies.
The relative disregard of QM from a buyer‟s perspective is surprising as it is estimated
that – regarding manufacturers offering goods – approximately 50% of quality prob-
lems result from defects in the materials purchased (Crosby, 1984; Dowst, 1987).
Thus, the quality of a company‟s output is highly dependent on the quality of its input
(Forker, 1997; Forker et al., 1997; Ghobadian & Gallear, 1997; Krause, Pagell, &
Curkovic, 2001; Yang, Wong, Lai, & Ntoko, 2009). A similar relation may also be
true considering the quality of incoming services.
Quality Management Practices for Business Services from a Buyer‟s Perspective
3
1.2 Services, BS and scope of work
Although the discussion about what services actually are had started already in the
1960s (Fisk, Brown, & Bitner, 1993), until today no agreement on a universal defini-
tion has been achieved (Corsten, 2001; Seth, Deshmukh, & Vrat, 2006c). Nonetheless,
authors agree that services possess several characteristics which differentiate them
from goods (Schneider & White, 2004; Svensson, 2006). Among these are their heter-
ogeneity, intangibility and inseparability of production and consumption (Parasuraman
& Varadarajan, 1988; Parasuraman, Zeithaml, & Berry, 1985) as well as the fact that
service production normally, but not necessarily always, involves some interaction
between customer and provider (Grönroos, 2007; Meffert & Bruhn, 2000). These
characteristics can all be considered continua on which different service types vary
(Jackson & Cooper, 1988; Schneider & White, 2004). BS in this context are under-
stood as services which are delivered by firms or organizations and bought by other
firms or organizations (Axelsson & Wynstra, 2002; van der Valk & Rozemeijer,
2009).
It is important to note that the characteristics of services may have some implications
on the design of QM for BS from a buying company‟s perspective, which may differ-
entiate it from QM for goods (cf. Jackson et al., 1995; Rönnbäck & Witell, 2008;
Schneider & White, 2004; van der Valk & Rozemeijer, 2009):
Heterogeneity of services may make it complex to design a QM that fits to all
types of BS. In contrast, it may be necessary for a buying company to decide
which combinations of QM practices are best suited for a specific type of busi-
ness service.
Intangibility may result in difficulties in the evaluation and comparison of BS as
a customer cannot see, hear, feel, smell or taste them (Haller, 2002; Jackson &
Cooper, 1988). As a result, business customers will possibly put greater emphasis
on personal (and thus subjective) information sources to substitute more objec-
tive measurements and/or include criteria to measure the results and outcomes of
services into their QM (Schneider & Bowen, 1995).
The inseparability of production and consumption of services implies that the
services do not yet exist when the buying company purchases it. This stresses the
need for clarifying the content of the service as requested by the customer and
suggests that QM of BS may already start before the purchase contract is signed.
4 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Furthermore, it means that BS cannot be stored. Consequently, a buying compa-
ny may put particular emphasis on the availability of BS.
As service production often involves interaction between service provider and
customer, this interaction is an essential ingredient to the service experience.
Therefore, buying organizations may include an assessment of the interaction
process into their QM of BS. Furthermore, the variety of (internal or external)
customers of a buying company may result in different service demands. Thus, it
possibly is necessary for a buying company to adjust their QM practices to the
usage of the business service by their customers in order to meet expectations.
Due to the heterogeneity of BS it is vital to define which BS are in scope of this re-
search project. The aim of defining the scope is to list the BS which account for a sig-
nificant section of service spend of companies within a range of industries. Further-
more, the services in scope should be clearly distinguishable from each other. To
achieve this, the BS examined by two benchmarking studies on indirect spend man-
agement (CAPS Research, 2003; BME, 2005b) and a service classification proposed
by Axelsson & Wynstra (2002) were compared with regard to their classification of
BS. The BS used by these three studies as well as those in scope of this research pro-
ject are depicted in Table 1.
Quality Management Practices for Business Services from a Buyer‟s Perspective
5
Table 1: Overview of BS in scope
No. BS in scope of
paper
(in alphabetical
order)
Examples of BS
in scope of this
paper
Axelsson &
Wynstra (2002)
BME (2005b) CAPS Research
(2003)
1 Computer installa-tion and mainte-nance services
Hardware and software imple-mentation, cus-tomization,
maintenance on single user level, telecommunication services
Information IT services Computer hard-ware, software
2 Facility services Cleaning, catering, security, real es-tate maintenance
Real estate, rental and leasing
Facility manage-ment
Facilities mainte-nance
3 Financial services Banking, finance, insurance
Finance and insurance
Financial services Insurance
4 Professional ser-vices
Management con-sultancy, software
development and implementation on company or unit level, accounting and auditing, legal, architects
Professional, scientific and
technical; man-agement of com-panies and enter-prises
Consulting, patent and legal services,
purchasing ser-vices
Consulting
5 Research and development ser-vices
Development, engineering
Professional, scientific and technical
Research and development
Engineering and manufacturing equipment
6 Technical mainte-nance and repair services
Maintenance and repair of produc-tion equipment
Administrative, support, and waste manage-ment
Industrial mainte-nance
Industrial supply
7 Transportation and distribution services
Warehousing, value-added logis-tics, transport
Transportation and warehousing
Logistics services Logistics freight
8 Fleet management services
Provision of vehi-cles for transporta-tion of staff or goods
Not included Fleet management Fleet (executive, non-executive)
9 Human resource services
Training, recruit-ment
Not included Human resource services
Employee bene-fits
10 Marketing ser-vices
Campaign devel-opment, produc-tion, print services
Not included Marketing ser-vices
Marketing; print-ing
11 Travel manage-ment services
Organisation and booking of busi-ness travels
Accomodation and food services
Travel manage-ment
Total Travel
The BS in scope of this research project cover most of the services examined in the
aforementioned studies. The business service “purchasing services” used by the Ger-
6 Quality Management Practices for Business Services
from a Buyer‟s Perspective
man Association Materials Management, Purchasing and Logistics (BME) will, how-
ever, not form part of further investigation in the research project due to their missing
definition in the study. Furthermore, it is assumed they do not reach the threshold of
portion of a company‟s spend in a B2B environment to be considered significant.
1.3 Classification of BS
In order to better handle the heterogeneity of the BS in scope, this thesis will make use
of a classification. The services management and marketing literature offers various
examples of service classifications for consumer services (see, for example, Bruhn,
2006; Grönroos, 2007; Lovelock, 1983; Meffert & Bruhn, 2000; Schneider & White,
2004). However, Boyt & Harvey (1997) and Smeltzer & Ogden (2002) emphasize that
less attention has been given to the classification of BS. Furthermore, most of the cate-
gorizations of BS hinge on the characteristics of the provider rather than on the ones of
the buyer (van der Valk, 2007). These classifications may therefore not be sufficient in
the attempt to understand how professional procurement manages the quality of pur-
chased BS. Jackson et al. (1995) suggest that usage of a BS affects the classification.
Wynstra et al. (2006) share this view and conclude that the application of a BS by a
buying organization affects the buyer-supplier interaction patterns. They propose a
classification consisting of four different types of services (Wynstra et al., 2006; van
der Valk, Wynstra, & Axelsson, 2009):
Component services become a rather unaltered part of the buying company‟s of-
fer to the end customer
Semi-manufactured services are offered to the end customer as well but only af-
ter being changed by the buying company
Instrumental services are used as tools or instruments by the buying company in
order to produce their own product or service
Consumption services are used completely within the buying organization and
are not part of the final offer to the end customer
This scheme is also used to arrange BS according to their usage in this research project
as it entails several advantages for research in a B2B environment. First, it is rather
independent from the characteristics of the service and may thus allow industry specif-
ic answers regarding QM. For example, facility services may be regarded as a con-
Quality Management Practices for Business Services from a Buyer‟s Perspective
7
sumption service for manufacturers but as a component service for real estate compa-
nies. Thus, various organisations may adopt different types of QM for the same ser-
vice. Second, this classification will still allow businesses to provide information even
if they have not yet implemented QM practices for the full range of their externally
sourced BS as it is suggested by the focus on purchasing of goods of many companies
(BME, 2007). Not many buying companies, for instance, may have implemented QM
for consumption services due to their presumably low impact on customer satisfaction,
sales etc. Nonetheless, they may still have some kind of quality QM practices in place
for some of their component services. After all, this thesis also wants to discover what
the major determinants of QM for BS in buying companies are. As the application of
BS may be one of them, the classification by Wynstra et al. (2006) and van der Valk &
Rozemeijer (2009) will be used as a guide to answer the question whether usage of the
BS by the buying company affects their QM.
1.4 Research overview
The thesis is organized in five chapters. The first chapter introduces the topic by clari-
fying the significance of BS for buying companies and formulating the problem. Fur-
thermore, the research objectives and major definitions, such as services and BS, are
presented. In addition, the scope of work and a potential classification of BS are intro-
duced as means to handle the heterogeneity of BS and the associated complexity of the
topic.
8 Quality Management Practices for Business Servicesfrom a Buyer’s Perspective
Figure 1: Structure of the thesis
1. Introduction
2. Current status of research
3. Research methodology
3.3.2 1st phase: Case studies
1.1 Research overview
1.2 Significance of business services
1.3 Research objectives
1.4 Classification of business services
2.5 Summary of current status of research
2.3 Relevant research on service quality
2.2 Relevant research on purchasing of services
2.4 Relevant research on quality management
3.1 Research questions
3.2 Positioning and phases of the research
3.2.1 Positioning of the research
3.2.2 Phases of the research
4. Publication structure and key results
5. Overall conclusion
5.1 Summary of objectives
5.2 Theoretical implications
5.3 Managerial implications
5.4 Limitations and future research
Appendix: Full papers
Paper B Paper A Paper DPaper C Quality
Management Practices for
Business Services: A
Research Agenda from a Buyer’s
Perspective
Exploring quality management for business services from a buyer’s
perspective using multiple case
study evidence
Comparison of quality
management for externally
sourced business services
Quality management for business services from a buyer’s
perspective
3.2.2.1 First phase: Description of the research problem
3.2.2.2 Second phase: Explanation of the research problem
3.2.2.3 Third phase: Hypothesis testing
Abstract
Introduction
Paper A Abstract
Introduction
Paper DAbstract
Introduction
Paper C Abstract
Introduction
Paper B
Quality Management Practices for Business Services from a Buyer‟s Perspective
9
The second chapter describes several concepts and streams of literature regarding pur-
chasing of services, service quality and QM. The aim of this chapter is to structure the
problem from a scientific viewpoint and to assess what existing research contributes to
the overall research question. Furthermore, research gaps are identified and the basis
for preliminary propositions and the development of a research framework is built.
The objective of Chapter 3 is to provide a detailed overview of the research process.
Therefore, the chapter begins with the definition of the research questions based on the
research gaps identified in the previous chapter. Afterwards, the three-phased research
methodology is outlined.
Chapter 4 introduces the publication structure and the key findings of the four scien-
tific papers which form this cumulative thesis.
Ultimately, an overall conclusion is drawn in Chapter 5. After summarizing the objec-
tives of this thesis, the theoretical and managerial implications are reviewed. Further-
more, potential paths for future research are explicated based on identified limitations
of this thesis. The full versions of the four papers building the cornerstones of this cu-
mulative thesis are given in the appendix.
1.5 Research objectives
To a large extent, the academic research on service quality has focused on B2C ser-
vices and research on QM mainly assumes the perspective of a goods or service pro-
vider. A closer investigation of QM practices utilized by buying companies for exter-
nally sourced BS may therefore enrich academic and practical knowledge in several
ways: First, it may contribute to theory in the area of QM by examining QM practices
from the perspective of a customer in a B2B environment instead of a vendor. Fur-
thermore, it specifically focuses on QM practices for externally sourced BS and tests
the relationships between QM practices and their effects on organizational perfor-
mance. Such an inquiry may confirm or disconfirm findings of earlier research by
transferring knowledge into an unchartered area and testing its applicability in this new
environment. Second, it provides practitioners in buying companies with recommenda-
tions regarding the design and usage of QM practices in this specific context. Thus, it
may assist purchasers in integrating service quality in their overall evaluation of ser-
vice offers. Service providers, however, may benefit from further insights into how
their services are assessed by buying companies and thus may be better enabled to ad-
10 Quality Management Practices for Business Services
from a Buyer‟s Perspective
just their service offerings to the requirements of their professional customers. There-
fore, the objective of the proposed thesis is to make a contribution to the development
of theory in the area of QM by transferring findings of earlier research and testing their
validity from a different angle than the one taken by most of the previous studies. Fur-
thermore, this thesis attempts to provide practical recommendations for QM initiatives
for externally sourced BS and thus to increase practical knowledge in the area of quali-
ty and supply management.
Quality Management Practices for Business Services from a Buyer‟s Perspective
11
2. Current status of research
The following chapter will present three areas of literature which promise to possess
the potential of providing further insights into the question how buying companies
manage the quality of externally sourced BS and how the usage of QM practices for
them is related to service quality and business performance:
a) Purchasing of services − which will be used to illustrate how BS are purchased
and what the major differences and difficulties in their procurement are. Due to
the rather infant state of research in this field it will be employed as an intro-
ductory remark to the subsequent fields of research.
b) Service quality − which is part of the wider domain of service marketing. This
topic will be used to clarify according to which dimensions buying companies
may evaluate service quality. Furthermore, this area may provide insights into
what differentiates service quality from other constructs such as satisfaction and
value.
c) QM − which constitutes a section of operations management. This literature
will shed light on the question which components represent QM and what their
impact on business performance is.
These streams of literature are presented and shortly discussed with respect to their
contribution to the overall research questions how buying companies manage the qual-
ity of incoming BS and if QM for externally sourced BS has effects on the perfor-
mance of the buying company.
2.1 Relevant research on purchasing of services
Although the actual figures may vary, BS represent a significant share of a company‟s
total acquisition cost for external resources (Axelsson & Wynstra, 2002; Cox et al.,
2005; van der Valk & Rozemeijer, 2009; Van Weele, 2005). For example, Fearon &
Bales (1995) estimated that, on a weighted average, externally purchased services rep-
resent more than half of a firm‟s total spend (Fearon & Bales, 1995). A more recent
study by the London School of Economics amongst 225 purchasing managers suggests
that BS account for approximately 15% of a firm‟s total expenditures (Centre for
Management Development, 2005). However, the study underlines that these figures
12 Quality Management Practices for Business Services
from a Buyer‟s Perspective
can only be roughly estimated as respondents do not possess full transparency of their
company‟s service spend (Centre for Management Development, 2005). The German
Association Materials Management, Purchasing and Logistics (BME) conclude that
BS comprise between 17 and 28% of German manufacturing companies‟ total operat-
ing expenses (BME, 2005b).
Despite their significance, purchasing of BS has not attracted the same attention by
management as purchasing of goods (Axelsson & Wynstra, 2002; Ellram et al., 2007;
van der Valk, 2008; van der Valk, 2007). This lack of professional attention may con-
tribute to survey results indicating that the majority of responsible managers worry
about how their companies buy professional services (Patel, 2005; Smeltzer & Ogden,
2002). Academic knowledge about purchasing of services also seems to be limited
compared to knowledge about purchasing of goods (Bals et al., 2009; Cox et al., 2005;
Ellram et al., 2007; Smeltzer & Ogden, 2002; van der Valk & Rozemeijer, 2009; van
der Valk, 2008; Wynstra et al., 2006).
This relative neglect may be partially due to the perception of purchasers that certain
aspects of the purchasing process for BS are more important and/or difficult than, or
just different in comparison with, the purchase process for goods (Axelsson &
Wynstra, 2002). Thus, existing purchasing practices for goods may not be directly ap-
plicable to services (van der Valk & Rozemeijer, 2009; Wittreich, 1966). Most of the
relatively little research available supports the notion that purchasing of services is
more difficult from a buyer‟s perspective than purchasing of goods. As several inquir-
ies depicted in Table 2 show, the higher complexity of service purchasing is mostly
related to the higher risk associated to quality failures (Fitzsimmons et al., 1998; Jack-
son et al., 1995; Mitchell, 1994; West, 1997) and the difficulties to evaluate the quality
of services (Ellram et al., 2007; Fitzsimmons et al., 1998; Jackson et al., 1995; Mitch-
ell, 1994; Smeltzer & Ogden, 2002).
Most authors agree that these differences between purchasing of services and goods
have their origin in the specific characteristics of services mentioned in Section 1.2
(Jackson et al., 1995). The intangibility and heterogeneity of BS exacerbates, for ex-
ample, their examination by organisational purchasers before or even after the pur-
chase and thus amplifies the perceived risk associated with the purchase (Jackson et
al., 1995; van der Valk & Rozemeijer, 2009). The inseparability of production and
consumption of services implies that the buying company is both consumer and co-
producer and cannot store services (Grönroos, 2007; Ellram et al., 2007). This makes a
clear specification of the service before the purchase more crucial but also complex
Quality Management Practices for Business Services from a Buyer‟s Perspective
13
and highlights how closely connected the selection of a supplier is to the post-purchase
quality evaluation (Jackson et al., 1995; Lindberg & Nordin, 2008). Finally, services
are delivered in interactions between human representatives of the service provider
and the buying company. Thus, it is difficult to produce them with consistent charac-
teristics and quality (Jackson et al., 1995; van der Valk & Rozemeijer, 2009). This
again complicates their standardization, counting and valuation (Lindberg & Nordin,
2008) and requires an assessment of the interaction process by various stakeholders
(Axelsson & Wynstra, 2002). Taken together the peculiarities of services imply that
they entail greater performance ambiguity (Bowen & Jones, 1986).
14 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Table 2: Summary of selected publications examining differences in purchasing of services to pur-
chasing of goods
Publication Type of study Sample size
and respond-
ents
Service
examined
Major differences between service and
goods purchasing
Ellram et al. (2007)
Conceptual n/a Business services
Evaluation of service quality and perfor-mance are not as easy to measure and speci-fy objectively as product quality. The lack of professional quality evaluation may offer opportunities for the service provider to take
advantage of their customers. Quality per-ceptions of services may be user-dependent.
Fitzsimmons
et al. (1998)
Conceptual n/a Business
services
Service purchasing is more complex due to
buyers facing higher risk exposure based on the relative intangibility of services, the need for customization of services and satisfac-tion of a larger number of affected person-nel. The quality of services is more difficult to evaluate.
Jackson et al. (1995)
Empirical (survey)
86 purchasers Industrial services
Purchasing of services includes higher per-ceived risks and their evaluation is more difficult. A higher degree of collaboration is required between buyer and seller in pur-
chasing of services. Respondents managed services differently according to their appli-cation by the buying company.
Mitchell (1994)
Conceptual n/a Consul-tancy ser-vices
The search for professional services and their post-purchasing evaluation are more difficult. Higher risk is associated with the purchasing of services.
Smeltzer & Ogden (2002)
Empirical (survey)
82 purchasing managers
Business services
The process activities which are seen as most complex in purchasing of services in comparison to goods are the evaluation of service performance, the definition of ser-vice specifications and the establishment of target costs.
Stock & Zinszer (1987)
Empirical (survey)
270 logistics executives
Profes-sional services
Personal sources of information (e.g. reputa-tion, recommendations) are most essential for purchasers of services. Quality of ser-
vices is a more crucial selection criterion than cost.
West (1997) Empirical (interviews)
10 senior purchasing
managers
Adverti-sing ser-
vices
Higher risk is associated with the purchasing of services. Poorly supplied services can
cause greater problems than low-quality goods as they can remain undetected longer.
It has to be noted, however, that more recently some researchers challenge the notion
of goods and services being different. These authors postulate that the similarities be-
tween services and goods have been underestimated. Levitt (1972), for instance, en-
courages the transfer of manufacturing principles such as standardization or specifica-
tion to the production of services in order to increase their quality and efficiency
(Levitt, 1972). Levitt‟s basic idea has been further elaborated into what has been la-
beled „lean service‟ (Bowen & Youngdahl, 1998: 207) as well as „mass customization‟
Quality Management Practices for Business Services from a Buyer‟s Perspective
15
(Duray, Ward, Milligan, & Berry, 2000: 605). These developments led Vargo & Lusch
(2004) to discard the characteristics of services (i.e. intangibility, inseparability and
heterogeneity) as these do not truly differentiate services from goods. They stress that
many services can have very tangible results (Vargo & Lusch, 2004).
Lindberg & Nordin (2008), however, have taken a medium and more dynamic stance
between the product-dominant logic which views the service as something tangible
(high degree of objectification and specification) which can be exchanged at a distance
(low degree of relational proximity) and the service-dominant logic which sees the
service as something which is intangible (low degree of objectification and specifica-
tion) and can only be exchanged in close buyer-supplier relationships (high degree of
relational proximity). They argued that the degree of objectification and specification
of a service varies according to the type of service (Lindberg & Nordin, 2008). For
example, it may be possible that for some BS clear specifications exist whereas for
others, these must be defined during the purchasing process by customer and supplier.
We follow this more dynamic view on service procurement and argue that it is coun-
terintuitive to assume that goods and services are quite similar considering that organi-
zational buyers experience such fundamental difficulties with buying services. How-
ever, BS are not homogenous. They are instead located on a continuum ranging from
intangible dominant to tangible dominant services (cf., for example, Jackson &
Cooper, 1988; Shostack, 1977). Therefore, what may be a suitable procurement ap-
proach for a specific business service may be inappropriate for another (Lindberg &
Nordin, 2008). Hence, the literature on purchasing of services supports the idea that
the type of service may have a significant impact on purchasing behavior and QM
practices. This view is also reflected in the preliminary conceptual model which is de-
veloped in the first article of this cumulative doctoral thesis.
The inherent differences in services made some authors suggest that they require spe-
cific purchasing processes and instruments which cannot be directly applied from the
purchasing of goods (Ellram et al., 2007). Therefore, several authors specifically in-
vestigate the acquisition process for services or present a potential process design on
basis of conceptual considerations. An overview of the various process models for
purchasing of services is presented in Table 3.
16 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Table 3: Overview of different process models for purchasing of services
Publication Type of study Sample size and
respondents
Service
examined
Process activities
(in chronological order)
Bals et al. (2009)
Empirical (interviews)
8 representatives of a German pharmaceutical company
Marketing services
Preparation
Search
Contracting
Monitoring
Day & Barksdale, Jr. (1994)
Conceptual n/a Professional services
Recognition of a need or problem
Identification of the initial consideration set
Evaluation of the consideration set
Selection of the service provider
Evaluation of the quality of service
delivery
Satisfaction/dissatisfaction
Ellram et al. (2007)
Conceptual n/a Business services
Plan
Source
Order
Receive and pay
Manage
Fitzsimmons et al. (1998)
Conceptual n/a Business services
Need identification
Information search
Vendor selection
Performance evaluation
Lindberg & Nordin (2008)
Empirical (interviews)
18 senior procurement managers from
various Swedish companies
Business services
Assignment specification
Supplier selection
Contract implementation
Outcome and evaluation
Mitchell
(1994)
Conceptual n/a Consultancy
services Problem identification
The search for consultancy suppliers
The briefing
Evaluation of alternatives
The appointment
Managing the project
Post-purchase evaluation Smeltzer & Ogden
(2002)
Empirical (survey)
82 purchasing managers
Business services
Write product specifications or
statement of work
Select suppliers
Ability to forecast future supplier
performance as a result of past performance
Trust in continuous performance reliability
Flexible delivery schedule
Transport from one location to another
Determine total cost
Negotiate prices
Compare suppliers‟ capabilities
Evaluate performance
Develop long-term relationship
Establish target cost
Manage early supplier involvement
Quality Management Practices for Business Services from a Buyer‟s Perspective
17
Publication Type of study Sample size and
respondents
Service
examined
Process activities
(in chronological order)
Conduct selection by supply or
sourcing teams
Make quantity purchases
Stock & Zinszer (1987)
Empirical (survey)
270 logistics executives
Professional services
Identification of the existence of a problem
Determination of internal or external
handling of the problem
Identification of possible consultants
Search for information about
consultants
Evaluation and recommendation of consultants
Selection of consultant
Review or evaluation of consultant performance
Management of project
van der Valk & Rozemeijer (2009)
Conceptual n/a Business services
Specify
Request for information
Detailed specification
Select
Contract
Order
Expedite
Evaluate
West (1997) Empirical (interviews)
10 senior purchasing
managers
Advertising services
Search
Alternative evaluation
Choice
What becomes obvious when regarding Table 3 is that so far no generally accepted
model of the purchasing process for services could be generated. Rather, the processes
put forward by the various authors differ greatly in number, content and granularity of
the activities included. Some processes comprise actions which are specific to certain
types of BS or may even not be within the sphere of responsibility of the employees
involved in the purchasing process (see, for example, the project management activity
in the models by Mitchell, 1994 and Stock & Zinszer, 1987). Other process models
seem to confound particular activities and their outcomes (for example, Smeltzer &
Ogden, 2002). Furthermore, it is interesting to note that some process models include
evaluation activities before and after the actual purchase (for example, Day & Barks-
dale, Jr., 1994; Stock & Zinszer, 1987) while others do not (see, for example, Bals et
al., 2009; Ellram et al., 2007). Van der Valk (2008) has underlined in this context that
research on purchasing of services focused on the initial stages of the purchasing pro-
cess (for example, supplier selection). Therefore, the quality of services is rarely chal-
lenged (van der Valk & Rozemeijer, 2009). Hence, with this research we follow a call
from Day & Barksdale, Jr. (1994) to investigate how the post-purchase evaluation of
18 Quality Management Practices for Business Services
from a Buyer‟s Perspective
services is handled by buying companies and how it may interrelate with the pre-
purchase selection process (Day & Barksdale, Jr., 1994).
Another recurring theme within the realm of literature on purchasing of services is
purchasing‟s involvement in the process of procuring services. The expression of
meaningful involvement has originally been coined by Stuart (1991: 30) as: “The time-
ly and useful collaboration of purchasing‟s knowledge and expertise […] in all aspects
of the acquisition process. This includes the decision-making process leading to the
best buy decision, with the objective of satisfying the immediate needs of the specifier
and the long term needs and strategic objectives of the [organization] as a whole.”
Johnson & Leenders (2003) also referred „meaningful involvement‟ (Johnson &
Leenders, 2003: 29) to an ideal level of involvement of the purchasing function associ-
ated with positive effects for a company. They emphasize, however, that purchasing
could also take different, less significant roles in the purchasing process resulting in
none, documentary or just professional participation (Johnson & Leenders, 2003).
Many authors assume a positive relationship between higher levels of purchasing in-
volvement in the procurement process for services and performance of the buying
company. For example, higher involvement of a firm‟s purchasing department can add
value by ensuring that funds are spent properly (i.e. in accordance with corporate and
functional goals), improving the quality of the good or service purchased, and saving
time (either by reducing the time invested by the client department during the purchas-
ing process or time which is lost when the service purchase fails) and money (i.e. re-
ducing acquisition costs) (see, for example, Bals & Hartmann, 2007; González-Benito,
2007; Lonsdale & Watson, 2005; Schiele & McCue, 2006; Young & Varble, 1997;
West, 1997). Furthermore, purchasing can contribute to a company‟s level of innova-
tiveness (Krause et al., 2001) and access to supplier markets (Walter, Ritter, & Ge-
münden, 2001). In addition, Mitchell (1994) pointed out that it could have most haz-
ardous effects on a company if certain services, such as professional services, are not
bought professionally (Mitchell, 1994).
Despite these desirable effects of purchasing involvement, Fearon & Bales (1995) de-
tected that the purchasing department, on average, was directly responsible in only
41% of total purchases (Fearon & Bales, 1995). Smeltzer & Ogden (2002) support the-
se findings adding that purchasing is much more likely to be bypassed in service rather
than goods purchasing. In many companies, services are purchased decentrally by the
requesting department which offers opportunities for placing orders with service pro-
viders unapproved by purchasing and for suppliers to deliver non-standardized ser-
Quality Management Practices for Business Services from a Buyer‟s Perspective
19
vices (Ellram et al., 2007; van der Valk & Rozemeijer, 2009). Van Weele (2005) as-
serts that internal customers and specialists within the requesting departments often
have strong relationships with their service providers in which they do not accept pur-
chasing to interfere (Van Weele, 2005).
Various factors can influence the degree of purchasing involvement in the purchasing
process for BS. Most recently, Bals et al. (2009) investigated purchasing involvement
in a German pharmaceutical company and detected that lack of awareness and motiva-
tion to cooperate on part of the internal client as well as lacking skills of purchasers are
major barriers to purchasing participation. In addition, they ascertain that purchasing
involvement increased with higher levels of purchasing complexity and involvement
experience (Bals et al., 2009). Schiele & McCue (2006) highlight the role of purchas-
ing department‟s trustworthiness for higher levels of purchasing involvement in pur-
chasing of professional services in the public sector. They discovered that higher lev-
els of trustworthiness of the purchasing department led to greater willingness of the
internal clients to involve purchasing in the purchasing process. Finally, more intense
purchasing involvement results in more value added by purchasing. According to
them, factors that affect purchasing involvement are physical and social factors of pro-
curement, internal organization, personal factors of the purchasing and client depart-
ments as well as factors related to the service being purchased (Schiele & McCue,
2006).
What becomes obvious from the paragraphs above is that the purchasing process is a
cross-functional activity (Lonsdale & Watson, 2005) in which purchasing‟s involve-
ment is still lacking (Cox et al., 2005). For this thesis two conclusions can be drawn:
First, in order to examine how buying companies manage the quality of their external-
ly sourced BS it will not be sufficient to obtain insights from just the purchasing de-
partment. Rather, several process stakeholders, such as QM and the internal user of the
service, must be integrated in the research. Second, QM for BS may be an area in
which purchasing can assume leadership in order to professionalize the supply of ex-
ternally sourced BS. If purchasing accepted this role as an innovator of new business
processes, it may increase its involvement in the whole purchasing process for BS.
Thus, purchasing would follow a recommendation by Ellram et al. (2007) and assist
the user in developing methods, systems and tools to assess supplier performance tak-
ing on the full responsibility for the buyer-supplier relationship (Ellram et al., 2007).
As mentioned earlier, this section shows that research on purchasing of services is still
in a rather infant stage. So far, no agreement could be achieved on how the purchasing
20 Quality Management Practices for Business Services
from a Buyer‟s Perspective
process for services is organized and why purchasing has still not reached the level of
involvement its organizational role would purport. This relative disregard may have its
origin in the rather late consideration of purchasing as strategic function contributing
to competitive advantage (Krause et al., 2001; Zhang, 2008). Furthermore, the evolu-
tion of purchasing as a function has been comparably slow and therefore much of the
research on purchasing is still conceptual or based on a small number of case studies
(Ellram & Carr, 1994; Zhang, 2008). In particular, it can be shown that within pur-
chasing, the post-purchase processes and thus the evaluation of service quality have
been largely neglected (Day & Barksdale, Jr., 1994; Ellram et al., 2007; van der Valk
& Rozemeijer, 2009; van der Valk, 2008). Hence, although the literature on purchas-
ing of services underscores the need for the proposed research it cannot contribute
much to answering the general question how buying companies manage the quality of
externally sourced BS (see also Section 3.1 for the detailed research questions). In the
following, the potential contribution of two additional areas of literature will be con-
sidered: service quality and QM.
Notwithstanding, we assume that this research project will broaden the research on
purchasing in several ways. First, it will shed light on the so far neglected activities
which happen after the actual purchase is completed. Second, by using a three-step
research process consisting of a description and explanation of the research problem as
well as its testing by qualitative and quantitative research methods it will go beyond a
solely conceptual research in the area of purchasing.
2.2 Relevant research on service quality
Two research areas in the field of service quality may provide further insights to an-
swering the main research question of this thesis: (a) research on service quality mod-
els and dimensions, and (b) research on the relationship between service quality and
customer satisfaction.
The research on service quality models predominantly debates which dimensions are
evaluated when quality of a service is assessed by customers (Lehtinen & Lehtinen,
1991). Two schools have emerged from this literature (Brady & Cronin, Jr., 2001;
Woo & Ennew, 2005):
Quality Management Practices for Business Services from a Buyer‟s Perspective
21
a) the “Nordic” school which is based upon ideas of Grönroos (1984; 2007) who
suggests that a technical (i.e. the “what”) and a functional (i.e. the “how”) dimen-
sion determine what customers perceive as service quality;
b) the “American” school with its widely used model of service quality proposed by
Parasuraman et al. (1985; 1988; 1991) which uses dimensions that conceptualize
service quality in terms of the characteristics of service delivery (i.e., reliability,
responsiveness, empathy, assurances, and tangibles) (Shonk, 2006).
Both the Nordic as well as the early conceptualizations of the American school are
based on the disconfirmation paradigm which posits that perceived quality is a result
of a comparison between customer service expectations and perceived service perfor-
mance (Brady & Cronin, Jr., 2001; Churchill & Surprenant, 1982; Oliver, 1980; Oli-
ver, 1981; Rust & Oliver, 1994b).1 In Table 4, major models of both camps are shortly
described in terms of the quality dimensions used. The aim is to illustrate which di-
mensions of service quality should be covered by a buying company‟s QM practices.
Although this review of service quality models does not claim to be a comprehensive
scrutiny, it is argued that – in spite of some conceptual differences – the dimensions
used in the various models represent the potential service quality dimensions of BS.
Moreover, we propose that they can be assigned to three overall categories of service
quality dimensions (see also Chelladurai & Chang, 2000; Shonk, 2006): Physical ap-
pearance (appearance of facilities, uniforms, documents etc. of the service provider),
interaction (process of service delivery, interpersonal relations etc. between service
provider and customer) and outcome quality (the result of the service). Table 4 assigns
the service quality dimensions of the models to these three categories to visualize this
notion.
1 It has to be noted, however, that the disconfirmation paradigm has been subject to debate as, for example, it
may be difficult for customers to clearly define expectations and for providers to interpret these expectations (Laesser, 2008; Schneider & White, 2004; Tian-Cole & Cromption, 2003).
22 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Table 4: Description of service quality dimensions in B2C contexts and their assignment to physical
context, interaction, and outcome quality
Model Dimension Short description Assignment to
conceptual dimen-
sion
Brady & Cronin, Jr. (2001)
Interaction quality
Customers‟ interpersonal actions that ensue during service delivery
Interaction quality
Outcome quality
Customers‟ perceptions as what he is left with when the service has been rendered
Outcome quality
Physical environment
quality
Surrounding environment or physical facilities of a service provider
Physical context quality
Dabholkar, Thorpe, &
Rentz (1996)
Personal interaction
Way the customer perceives being treated by the retail store staff
Interaction quality
Physical aspects
Appearance and the layout of the retail store Physical context quality
Reliability Ability of a service provider to perform the prom-ised service accurately
Interaction quality
Grönroos
(1984)
Functional
quality
Outcome, i.e. what a customer actually receives Outcome quality
Technical quality
Perceived interaction, i.e. how the customer obtains the service
Interaction quality
Lehtinen & Lehtinen (1991) – first model
Corporate quality
Customers‟ view of the provider‟s reputation and image
Interaction quality
Interactive quality
Interaction processes between customer and service provider and/or their equipment
Interaction quality
Physical
quality
Materials and facilities of a service provider Physical context
quality Lehtinen & Lehtinen
(1991) – second model
Output quality
Customers‟ evaluation concerning the result of a service production
Outcome quality
Process quality
Customers‟ perception of the service production process and his/her participation
Interaction quality
Parasuraman et al. (1988)
Assurance Knowledge and courtesy of employees and their ability to inspire trust and confidence
Interaction quality
Empathy The caring, individualized attention the service
provider offers its customers
Interaction quality
Reliability The ability of a service provider to perform the promised service dependably and accurately
Interaction quality
Responsive-ness
The willingness of the service provider to help customers and provide prompt service
Interaction quality
Tangibles Physical facilities, equipment, and appearance of service providers‟ personnel
Physical context quality
Rust & Oliver
(1994a)
Service
environment
Internal environment of the service provider in
regard to its organizational culture and philosophy towards service provision (e.g. organizational cul-ture and philosophy) and external environment, i.e. physical appearance of the service provider‟s loca-tion
Physical context
quality
Service delivery
Perceived quality of the interaction process between customer and service provider
Interaction quality
Service product
Design of the service including the specifications and service targets to offer
Outcome quality
Quality Management Practices for Business Services from a Buyer‟s Perspective
23
As noted before, comparably little research exists, which examines the service quality
dimensions of BS. Some of the available studies are depicted in Table 5. In addition to
research regarding the dimensionality of service quality in a B2B context, some re-
searchers developed conceptual models for its measurement:
For example, Seth, Deshmukh, & Vrat (2006b) designed a framework for the assess-
ment of service quality in supply chains. It entails six potential gaps between custom-
ers‟ service expectations and their evaluations of service experiences which may arise
in the relationship between supplier, focal firm, distributor, and consumer. Moreover,
Niranjan & Metri (2008) proposed a conceptualization on the measurement of service
quality in a B2B environment regarding outsourced call centers. They suggest using
measures of B2B service quality regarding the relationship between call center ven-
dors and their business clients whereas utilizing B2C service quality dimensions con-
sidering the relationship between call center vendors and consumers.
Although these studies provide valuable insights into the dimensionality of service
quality in a B2B environment and offer first conceptual models, they do not examine
which QM practices buying companies use for managing the quality of their purchased
business services. Yet, the literature on service quality models and dimensions eluci-
dated above has several ramifications for QM practices for BS from a buyer‟s perspec-
tive. First, the practices employed should be able to establish the evaluation of quality
along the axes of physical appearance, interaction and outcome quality. Second, they
should be flexible enough to define the dimensions within these axes according to the
BS in focus and to assign different weights to different dimensions in alignment with
the subjective estimation of significance of a single dimension by the buying company.
Consequently QM practices may be used for all BS in the same way. Rather their de-
sign is subject to the quality dimensions and should be adjustable to them. Thus, the
service quality dimensions may represent an important determinant of the usage of
QM practices for BS by buying companies. This notion also informed the development
of the preliminary conceptual model in the first article of this cumulative thesis.
In addition to literature on service quality models and their dimensions, research on the
relationship between service quality and customer satisfaction provides further insights
for the topic of this thesis. Although similar, most authors consider service quality and
customer satisfaction as different constructs distinguished by the following differences
24 Quality Management Practices for Business Services
from a Buyer‟s Perspective
(see also Hernon & Nitecki, 2001; Laesser, 2008; Schneider & White, 2004; Tian-Cole
& Cromption, 2003)2:
Satisfaction can only result from an evaluation of a service and thus, a customer
has to experience the service to be satisfied or dissatisfied with it. In this sense
satisfaction is a post-experience decision. Quality, by contrast, can be assessed
without a direct experience but indirectly, for instance, by means of detailed in-
formation about a service before the actual purchase (Churchill & Surprenant,
1982; Bolton & Drew, 1991; Parasuraman et al., 1991; Rust & Oliver, 1994a;
Woodside, Frey, & Daly, 1989)
Evaluation of quality is in most cases more specific, objective and of normative
character whereas evaluations of satisfaction are more unspecific, emotional and
affective (Dabholkar, 1995; Hernon & Nitecki, 2001; Spreng & Mackoy, 1996).
Assessment of quality is more comprehensive and holistic, whereas evaluation of
satisfaction is mostly transaction-specific (Bitner, 1990; Cronin, Jr. & Taylor,
1992; Parasuraman et al., 1988; Reeves & Bednard, 1994; Kuo, Wu, & Deng,
2009).
2 Although some authors regard quality and value as highly interrelated (see, for example, Reeves & Bednard,
1994), throughout this thesis they are considered distinct concepts. Whereas quality incorporates the percep-tion of meeting or exceeding expectations, value focuses on the benefit for the consumer (Hernon & Nitecki, 2001). Most definitions regard value as “a ratio of total benefits received to total sacrifices” (Patterson &
Spreng, 1997: 416) and see quality as an antecedent to it (Bolton & Drew, 1991; Dabholkar, 1995; Patterson, Johnson, & Spreng, 1997; Storbacka, Strandvik, & Grönroos, 1994). Due to these differences, value and price will be viewed as constructs distinct to service quality.
Quality Management Practices for Business Services from a Buyer‟s Perspective
25
Table 5: Summary of selected publications examining the dimensions of service quality in a B2B environment
Publication Type of
study
Sample size and
respondents
Service examined Model used Major findings regarding service quality dimensions
Bienstock et al. (1997)
Empirical (survey)
462 purchasers Physical distribution service
Revised SERV-QUAL
Timeliness, availability, condition have most significant impact on service quality perception of professional buy-ers.
Brensinger & Lam-
bert (1990)
Empirical
(survey)
170 purchasers Less-than-truckload
(LTL) motor carrier ser-vice
SERVQUAL The predictive quality of SERVQUAL in this context was
low.
Durvasula, Lysonski,
& Mehta (1999)
Empirical
(survey)
114 shipping
managers
Ocean freight services SERVQUAL Tangibles, reliability and a third factor combining respon-
siveness, assurance, and empathy best fit for measuring service quality.
Gounaris (2005) Empirical (survey)
515 senior man-agers from ser-
vice customers
Training and recruiting consultancies, corporate
banking, software devel-opment and maintenance, freight shipping.
SERVQUAL vs. alternative model
INDSERV
INDSERV comprising the dimensions potential quality, hard quality, soft quality, and outcome quality outper-
forms SERVQUAL.
Harte & Dale (1995) Conceptual n/a Professional services SERVQUAL and literature research
Tangibles, empathy, assurance, reliability, timeliness are requested most by clients of professional services.
Patterson & Spreng (1997)
Empirical (survey)
128 users of consultancy
services
Professional BS Dimensions based on Grönroos (1984)
The technical/outcome factor was more significant than the five process dimensions (methodology, service, rela-
tionships, global and problem identification).
Seth et al. (2006b) Empirical (survey)
117 professionals Transport services Revised SERV-QUAL
Service reliability, credibility, service competence, intra-organisational communication, service flexibility, finan-
cial trust and pleasant environment have most significant impact on service quality perception of professional buy-ers.
Woo & Ennew
(2005)
Empirical
(survey)
185 senior gov-
ernment engi-neers and profes-sional architects
Consulting engineering
services
International/ Indus-
trial Marketing and Purchasing Group (IMP) interaction model (Håkansson, 1982; Ford, 1997)
The quality criteria social exchange and cooperation are
relatively more important than financial exchange, prod-uct/service exchange, information exchange, and adapta-tion in customer‟s evaluation of quality for professional services.
26 Quality Management Practices for Business Services
from a Buyer‟s Perspective
The implications of these distinctions are that (a) a QM for BS in buying companies
should allow for indirect assessment of service quality, for example, by an in-depth
communication process about quality before service production, (b) it should include
normative criteria whenever possible so that it can serve as a quality diagnostic and
planning tool (for example, by clearly defined service specifications), and (c) whenev-
er appropriate, it should not only regard single transactions but should take a more
comprehensive view, for example, by building up service quality data on several past
service deliveries.
Most authors – although not all (cf., for example, Bitner, 1990; Bolton & Drew, 1991)
– now conclude that there is a causal relationship between service quality and custom-
er satisfaction and that service quality is an antecedent of customer satisfaction
(Churchill & Surprenant, 1982; Cronin, Jr. & Taylor, 1992; Cronin, Jr., Brady, & Hult,
2000; Schneider & White, 2004; Storbacka, Strandvik, & Grönroos, 1994; Woodside
et al., 1989). Moreover, many researchers also posit that customer satisfaction is posi-
tively related to customer‟s repurchase intentions and thus to a firm‟s sales volume
(Cronin, Jr. et al., 2000; Patterson & Spreng, 1997; Schneider & White, 2004; Shonk,
2006; Kuo et al., 2009). These relationships are conceptually reflected in the service
profit chain, a theoretical framework developed by Heskett, Jones, Loveman, Sasser,
Jr., & Schlesinger (2008). The model proposes that „[…] profit and growth are stimu-
lated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction.
Satisfaction is largely influenced by the value of services provided to customers. Value
is created by satisfied, loyal and productive employees. Employee satisfaction, in turn,
results primarily from high-quality support services and policies that enable employees
to deliver results to customers‟ (Heskett et al., 2008: 120).
What do the relationships specified above mean for the research topic? First, buying
companies may ultimately enhance their financial performance by improving the
quality of their externally sourced BS. The adoption of QM practices may help to ame-
liorate this quality. Second, it signifies that the alleged enhancement of financial per-
formance may roughly be reached in two ways: either by increasing the quality of BS
transferred to external customers by the buying company or by an improvement of the
quality of BS utilized by internal employees. The first way may lead to raised custom-
er satisfaction resulting in loyalty and higher revenues. The second way may cause
superior internal process efficiency and employee satisfaction resulting in reduced
costs.
Quality Management Practices for Business Services from a Buyer‟s Perspective
27
2.3 Relevant research on QM
It belongs to the most problematic issues for a researcher in the field of quality to find
a clear and appropriate definition for it (Fynes, 1999). Consequently, until today no
generally accepted definition of quality has been developed (Scharitzer, 1997; Sousa &
Voss, 2002). Various perspectives on quality can be adopted (Evans & Lindsay, 2002)
which were summarized by Garvin in an early stage of research on QM (Garvin, 1984;
Hardie & Walsh, 1994):
The transcendental perspective which puts quality on a level with excellence and
highest standards
The product-based view which regards quality as a measurable existence of a
product attribute
The user-based point of view which equalizes quality with satisfying the wants of
a customer
The manufacturing-based perspective which defines quality as conformance to
specifications
The value-based view in which quality is the result of an evaluation process by
the customer on basis of value considerations
Hardie & Walsh (1994) suggest that what the above mentioned stances on quality have
in common is that they include a comparison of two states - the state of how things
should be (requirement specification) and how things actually are (actual perfor-
mance). The difference of the two states represents the degree of quality. This notion is
also reflected in the definition of quality contained in the European Norm ISO
9000:9005 which defines quality as „[…] the degree to which a set of inherent charac-
teristics […] fulfils requirements‟ (DIN Deutsches Institut für Normung e.V., 2005:
18). This short delineation of a definition of quality adopted in this paper underlines
the need for companies buying BS to allow for opportunities for the specification of
requirements of these services in their QM.
Two streams within the research on QM may provide insights for the questions asked
in this paper and are presented and discussed shortly below: (a) literature on QM prac-
tices and (b) literature on the relationship between QM practices and firm perfor-
mance.
28 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Regarding the literature on QM, three levels of examination have to be distinguished
(Dean & Bowen, 1995; Evans & Lindsay, 2002; Rönnbäck & Witell, 2008; Sousa &
Voss, 2002): (a) principles, i.e. the basic management systems necessary for QM to
function, for example, continuous improvement, customer focus etc. (Zu, 2009), (b)
practices, i.e. the observable constructs of QM, for example, top management support,
quality information etc. (c) techniques, i.e. the guidelines and methods to perform cer-
tain activities, for example, quality function deployment, histograms etc. (Rönnbäck &
Witell, 2008). Sousa & Voss (2002) recommend that research on QM should deal with
the level of practices since „principles are too general for empirical research and tech-
niques are too detailed to obtain reliable results‟ (Sousa & Voss, 2002: 92). This thesis
concedes their view.
Saraph, Benson, & Schroeder (1989) were the first who identified a core set of eight
QM practices. Later, Flynn et al. (1994) categorized QM practices into seven dimen-
sions: top management support, quality information, process management, product (or
service) design, workforce management, supplier and customer involvement. Accord-
ing to Fynes (1999), these practices also mirror the dimensions used in quality award
schemes such as the Malcolm Baldrige National Quality Award (Baldrige National
Quality Program, 2010) or the European Foundation for Quality Management Award
(European Foundation for Quality Management, 2010) and are therefore the ones most
commonly examined (Molina-Azorín et al., 2009; Zu, 2009). Thus, they will form the
constructs, along which QM for BS by buying companies will be explored in this the-
sis. Their definitions and examples of potential techniques are shortly illustrated in
Table 6.
Quality Management Practices for Business Services from a Buyer‟s Perspective
29
Table 6: QM practices
QM practice Short description Potential techniques
Top manage-
ment support
Actions and behaviors of senior
management which show com-mitment to quality
Top management involvement, setting clear quality
objectives, encouragement of employee involvement into activities for quality improvement
Workforce management
Recognition of employee perfor-mance on quality and encourage-
ment team dynamics
Commitment to training, employee involvement, recognition and reward systems, quality circles
Supplier in-volvement
Establishment of long-term rela-tionships with suppliers and en-
hancement of suppliers‟ capabili-ties of meeting the purchasing company‟s requirements
Long-term relationships, application of vendor assess-ment, certification procedures
Quality infor-
mation
Adequate, accurate, and timely
visibility of defect rates, compli-ance to specifications, adherence to schedules etc.
Quality data and reporting, availability of quality data,
graphical depictions of data (e.g. flow-charts, histo-grams etc.)
Product and/or service design
Reviews of products and services before production and the design of products or services with re-spect to quality
Cross-functional project teams, Joint product develop-ment, design reviews
Customer involvement
Effective measurement and moni-toring of customers‟ needs, expec-tations and/or satisfaction
Close relationships, feedback mechanisms, customer satisfaction orientation
Process man-agement
Cross-departmental process anal-ysis and improvement
Process and role definitions, cleanliness and efficient organization of the workplace, statistical process con-trol
Another important area of research with regard to QM practices is the scrutiny, to
which extent they have an impact on a firm‟s performance (Sousa & Voss, 2002). Ad-
vocates of QM purport that QM practices can have a positive impact on a manufactur-
er‟s firm profitability either by the manufacturing or the market route (Deming, 1982;
Garvin, 1984; Garvin, 1988; Ghobadian & Gallear, 1997; Molina-Azorín et al., 2009;
Sousa & Voss, 2002; White, 1996):
In the market route, improvements of the product or service quality lead to higher rep-
utation for quality. This may result in a rise of sales and thus larger market share or
alternatively, to less elastic demand and higher prices. Increased market share, howev-
er, results in higher economies of scales, which lowers costs; decreased costs in turn
lead to higher profits. In the manufacturing route, enhanced product or service quality
leads to increased productivity and fewer defects, less rework, scrap cost, or lower
warranty and product liability costs. Increased productivity, lower rework and scrap
cost result in lower manufacturing and service cost whereas lower warranty and prod-
uct liability cost causes a decrease of service costs. Lower manufacturing and service
cost raise profits. In both cases profits can be achieved if the costs of the QM practices
are outweighed by the higher gains.
30 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Ample amount of research in the area of operations management and particular QM
has been conducted on the relationship between QM practices and organizational per-
formance (Zakuan, Yusof, Laosirihongthong, & Shaharoun, 2010). Organizational per-
formance in such studies is often regarded as how well an organization achieves its
market-oriented or operational as well as financial goals (Lakhal, 2009). In these
works operational performance was, for example, measured by constructs such as per-
centage of defects, cost of quality, product quality, on-time delivery, productivity re-
sults whereas return-on-assets, return-on-equity, return-on-investment, market share
and stock prices were used for measuring financial business performance (for an over-
view of empirical studies on the effect of QM practices on organizational performance
please refer to Kaynak, 2003; Molina-Azorín et al., 2009; Nair, 2006; Sila & Ebrahim-
pour, 2005). Sometimes these studies provide mixed results (Das, Handfield, Calan-
tone, & Ghosh, 2000; Nair, 2006; Rönnbäck & Witell, 2008). However, most authors
agree that the use of QM practices has a positive, significant and strong effect on oper-
ational performance (Dow, Samson, & Ford, 1999; Cua, McKone, & Schroeder, 2001;
Maani, Putterill, & Sluti, 1994; Sila & Ebrahimpour, 2005; Sluti, Maani, & Putterill,
1995; Sousa & Voss, 2002; White, 1996). The impact of QM practices on financial
business performance is seen as positive and significant, but in some cases less strong
than on operational performance (Capon, Farley, & Hoenig, 1990; Hendricks &
Singhal, 1997; Nilsson et al., 2001; Powell, 1995; Rönnbäck & Witell, 2008).
The aforementioned passages provide the potential rationale for the adoption of QM
practices for BS by a buying company. First, QM practices may have positive effects
on the quality of component and semi-manufactured services. Increasing quality of
these services may result in higher customer satisfaction and ultimately in higher sales
revenues. Second, QM practices may positively impact the quality of instrumental or
consumption services and thus raise internal operational performance. In addition to
potentially higher employee satisfaction, this may also result in increased productivity,
process efficiency and thus decreased cost.
Earlier research on QM (for example, Crosby, 1979; Deming, 1986; Flynn, Schroeder,
& Sakakibara, 1995; Hendricks & Singhal, 1997; Juran & Blanton Godfrey, 2000)
suggested that QM principles and practices are universally applicable. This view is
contended, however, by other inquiries arguing that the usage and the design of QM
practices could in fact be dependent on the context (for example, Ahire & Golhar,
1996; Dean & Bowen, 1995; Ghobadian & Gallear, 1997; Sila, 2007). The environ-
ment of a company using QM may therefore render certain practices of QM inappro-
Quality Management Practices for Business Services from a Buyer‟s Perspective
31
priate (Sila, 2007). Reports on failures in implementing QM seem to corroborate this
view (Shin, Kalinowski, & El-Enein, 1998; Sila, 2007). However, research taking the
environmental factors of companies using QM into account is still scarce (Ghobadian
& Gallear, 1997; Hendricks & Singhal, 2001; Sila, 2007). Sousa & Voss (2008) there-
fore called for more empirical research on QM which incorporates contingent factors
such as industry and organizational size as these can be considered most influential on
the adoption of QM practices.
Conversely to date, only little research has examined how the type of industry may
influence the design and application of QM (Lagrosen & Lagrosen, 2003; Powell,
1995; Rönnbäck & Witell, 2008). Most authors detected differences in the adoption of
QM practices between manufacturing and service companies with manufacturing
companies using more of the QM practices or more intensively (Beaumont, Sohal, &
Terziovski, 1997; Huq & Stolen, 1998; Lagrosen & Lagrosen, 2003; Quazi, Jemangin,
Kit, & Kian, 1998; Sharma & Gadenne, 2002; Solis, Subba, Raghu-Nathan, Chen, &
Pan, 1998).
In addition, research on whether small and large firms implement QM differently is
limited and existing studies provide distinct results (Ahire & Golhar, 1996; Chapman
& Sloan, 1999; Hendricks & Singhal, 2001; Sila, 2007). Most authors (Ahire &
Golhar, 1996; Chapman & Sloan, 1999; Davig, Brown, Friel, & Tabibzadeh, 2003;
Ghobadian & Gallear, 1997; Mohrman, Ramkrishnan, Lawler, & Ledford, 1995; Sun
& Cheng, 2002) identify differences in the adoption of QM practices between large
and small companies. However, the results presented by Sila (2007) do not provide
support for the assumption that smaller companies adopt QM practices in a different
way than large ones.3
The findings of these previous studies stress the need for an investigation of the poten-
tial impact of industry or firm size on the design of QM for BS. Both industry and firm
size may represent major determinants of the use of QM practices for BS by buying
companies. Therefore, the type of industry is integrated into the preliminary conceptu-
al model of the first paper of this thesis and the potential effects of both contextual
factors are further analyzed in its third paper.
The studies cited above all adopt the perspective of a goods or service provider. Only
recently researchers started examining the use of QM practices from a buying compa-
3 For a detailed review of the current status of research regarding QM manufacturing and services as well as in
large and small companies please refer to the third paper of this cumulative thesis.
32 Quality Management Practices for Business Services
from a Buyer‟s Perspective
ny‟s viewpoint (Sánchez-Rodríguez & Martínez-Lorente, 2004; Hemsworth et al.,
2005; Hemsworth et al., 2008). Sánchez-Rodríguez & Martínez-Lorente (2004) inves-
tigated the adoption of a subset of QM practices in purchasing departments of Spanish
manufacturing companies and their relationship to perceived purchasing and business
performance as well as internal customer satisfaction. They conclude that the QM
practices studied were positively and significantly related to perceived purchasing per-
formance and internal customer satisfaction, but only the practices “commitment of
purchasing management”, “coordination with other functional areas” and “employee
management” are positively correlated to perceived overall business performance
(Sánchez-Rodríguez & Martínez-Lorente, 2004). Later, Hemsworth et al. (2008) con-
firmed these findings using the same sample and data set (Hemsworth et al., 2008;
Hemsworth et al., 2005). Furthermore, they discovered that QM practices in purchas-
ing have a positive impact on purchasing performance mediated through the effect of
information systems.
These authors provide valuable first insights into the utilization of QM practices in
purchasing. However, they do not include the quality of incoming BS into their work
and their sample does not entail service companies. Furthermore, they rely on subjec-
tive perceptions of purchasing managers in the evaluation of purchasing and business
performance. This approach ignores the peculiar characteristics of services and their
potential impact on the application of QM practices as well as the differences in the
adoption of QM practices between manufacturing and service companies examined by
previous studies. In addition, the individual perceptions of just one group of respond-
ents may have led to „socially desirable‟ (Fontana & Frey, 2005: 702) answers. These
gaps underscore the need for this research project.
2.4 Summary of the current status of research
Based on the review of relevant literature in the previous sections, it is concluded that
a number of gaps remain regarding how buying companies manage the quality of ex-
ternally sourced BS.
Although there is a growing body of research related to the purchasing of services, the
literature has not yet reached an agreement on what the main components of the pur-
chasing process for services are, how the purchasing departments should be involved
in that process and which instruments can be used to evaluate the quality incoming
business services. In addition, most of the literature is conceptual in nature or based on
Quality Management Practices for Business Services from a Buyer‟s Perspective
33
a small number of case studies (Ellram & Carr, 1994; Zhang, 2008). Thus, the litera-
ture on purchasing of services cannot contribute much to answer the question how
buying companies manage the quality of incoming services. It has to be noted, howev-
er, that many authors have stressed that the post-purchase processes and the evaluation
of service quality in particular have been largely neglected and call for more research
(Day & Barksdale, Jr., 1994; Ellram et al., 2007; van der Valk & Rozemeijer, 2009;
van der Valk, 2008).
A comparably large amount of research in the field of service quality was conducted in
a B2C rather than a B2B context. Such studies attempted to answer the question ac-
cording to which dimensions consumers evaluate service quality of service providers.
The few studies which exist in a B2B setting, however, focus on a single service rather
than a comprehensive set of BS often bought by buying companies. Regarding the ef-
fects of service quality on organizational performance, current research suggests that
there is a positive relationship between service quality and satisfaction of customers.
Thus, the literature on service quality calls for further investigation of service quality
in a B2B context from a buyer‟s perspective. Furthermore, it suggests that the the in-
terrelation between service quality and satisfaction has to be integrated into the further
investigation of this doctoral thesis.
The QM literature predominantly takes the perspective of a goods or service provider.
It aims at answering questions regarding which QM practices are used by manufactur-
ing or service companies in order to improve the quality of their outgoing products.
Furthermore, they answer the question, how their application relates to operational or
financial business performance. So far, little attention has been given, however, to the
question whether the practices of QM are also utilized by customers (i.e. buying com-
panies) to manage the quality of externally sourced BS.
34 Quality Management Practices for Business Services
from a Buyer‟s Perspective
3. Research methodology
The following chapter illustrates and justifies the chosen research methodology of this
doctoral thesis. It will first define the research questions based on the research gaps
identified in the previous chapter. As suggested by Dul & Hak (2008), the preliminary
research framework and its propositions on basis of a literature review are constituted
at the beginning of a research process extending existing theory. The review of litera-
ture was conducted in Chapter 2 and the resulting research framework is explicated in
the first paper of this cumulative research project (see Appendix A). Section 3.2.1 de-
scribes the philosophical stance of this thesis as well as its constituting three research
phases. Finally, Section 3.2.2 specifies the methods used for answering the research
questions and underlines the exploratory as well as confirmatory utilization of data
gathering and analysis which this thesis adopts.
3.1 Research questions
In addressing the research gaps elucidated in the previous chapter, this doctoral thesis
aims to answer the following research questions (RQ):
RQ 1: How do buying companies use QM practices to manage the quality of externally
sourced business services?
RQ 2: How is the usage of QM practices for BS by buying companies related to ser-
vice quality and business performance?
RQ 3: What are the major determinants of the design of QM practices for BS by buy-
ing companies?
The objective of this study is to contribute to the academic literature by discovering
how QM practices are implemented by buying companies for their externally sourced
BS. For buying companies this may result in valuable insights on how to adopt or ad-
just such practices in order to manage and improve the quality of incoming BS. By
doing so, the study wants to provide practical recommendations for the design and use
of QM practices in the previously mentioned context. For service providers, the project
may give insights into how their business customers manage the quality of the offered
services. Thus, this study may give recommendations for adjustment and improvement
Quality Management Practices for Business Services from a Buyer‟s Perspective
35
of their service offerings in order to better match the quality requirements of their cus-
tomers.
3.2 Positioning and phases of the research
This thesis strives to combine the advantages of qualitative and quantitative research.
This mixed approach offers two advantages (cf. Bryman, 2006). First, it respects the
subjects‟ frame of reference as well as their definition of the phenomenon and miti-
gates biases in question-framing. Thus, it impedes a one-sided researcher-enforced
epistemology. Second, a mixed research methodology promises to close the re-
iterative cycle of describing, explaining and testing a research problem in contrast to a
research approach which only focuses on qualitative or quantitative methods (Mere-
dith, 1993). The following paragraphs will elaborate on the researcher‟s philosophical
position inspiring this work and the research methodology of the study.
3.2.1 Positioning of the research
Scientists are not free of bias or convictions since they care deeply about their work
(Daft, 1983) which therefore cannot be completely value-free (Crotty, 2003). Before
delving into the practical outline of this study, it is therefore advisable to clarify the
researcher‟s philosophical perspective in terms of ontology, epistemology, and human
nature in order to categorize his thinking.4
In terms of ontological assumptions, the present study views reality as a contextual
„[…] field of ever-changing form and activity based on the transmission of infor-
mation‟ (Morgan & Smircich, 1980: 495). Organizations and environment are under-
stood to evolve together and relationships are considered to be relative rather than
fixed and real (Morgan & Smircich, 1980).
Epistemologically, this study takes a medium stance between positivism and anti-
positivism (Burrell & Morgan, 1979). This implies the adoption of epistemologies
which are concerned with the mapping of contexts and facilitating understanding of
4 Burrell & Morgan (1979) underline the need for a clarification of a researcher‟s philosophical assumptions.
They suggest a continuum for analyzing assumptions about the nature of social science ranging from a sub-jectivist to an objectivist approach to social science. They stress, however, that social theories which perfect-
ly fit to one of the extremes are rare. This insight led to the development of several more nuanced refine-ments of the dichotomy (see, for example, Astley & Van de Ven, 1983; Guba & Lincoln, 2005; Morgan & Smircich, 1980; Schultz & Hatch, 1996).
36 Quality Management Practices for Business Services
from a Buyer‟s Perspective
the patterns of systemic relationships inherent in the ecological nature of such contexts
(Morgan & Smircich, 1980).
Furthermore, this study opines that humans are continuously engaged in a process of
interaction and exchange with their context. They receive, interpret and act on infor-
mation previously obtained; thereby creating a new pattern of information that effects
changes in the field as a whole (Morgan & Smircich, 1980). Thus, social entities are
conceptualized in reciprocal rather than one-sided relationships.
This doctoral thesis mirrors these assumptions by following a research methodology
suggested by Ulrich (2001) who conceptualized management studies as applied sci-
ence seeking the development of rules and models for the creation of a new reality ra-
ther than the composition of general theories explaining reality (Ulrich, 2001). Ac-
cording to Ulrich (2001), the research process commences with the identification of
problems which are relevant to business practice. Next, existing theories are selected
and interpreted according to their potential contribution to the problem solution. Based
on the theoretical background, evaluation criteria, decision rules, or conceptual models
are developed to further assess the business problem. These are then critically reflected
through generation and analysis of empirical data stemming from the practical context.
During this stage, it may be necessary to revise the initial framework which is finally
again tested consulting the professional practice in order to clarify its applicability.
3.2.2 Phases of the research
This thesis pursues the research process suggested by Ulrich (2001) by following three
phases depicted in Figure 2. The first research phase predominantly aims at describing
the research problem (Meredith, 1993) by analyzing the current state of research.
Therefore, different theoretical accesses are used to clarify the research gap and their
potential contributions to the solution of the practical phenomenon are evaluated. Fur-
thermore, the foundation for a clear formulation of the research questions is laid out.
This research phase mainly consists of Chapter 2 and the first part of the first paper of
this cumulative dissertation in Appendix A.
The second research phase mainly wants to provide first potential explanations of the
research problem (Meredith, 1993). It therefore develops a conceptual framework and
related preliminary propositions in the second part of the first article of this thesis (see
Appendix A). This conceptual framework is then refined by using data from a multiple
case study in the second article of this study which is presented in Appendix B.
Quality Management Practices for Business Services from a Buyer‟s Perspective
37
The third research phase is concerned with testing the conceptual framework devel-
oped in the second article. It comprises the formulation of hypotheses which are based
on the findings of the previous qualitative research phase and their quantitative testing
by the development of a measurement and structural model. The third research phase
is represented by the third and fourth article of this cumulative doctoral thesis in Ap-
pendix C and D.
The research phases of description, explanation and testing should not be viewed as
clearly separated activities but as overlapping an iterative processes which eventually
develop into theories „[…] as research study builds upon research study‟ (Meredith,
1993: 3).
During all research phases, management recommendations are derived on basis of the
research results in order to provide insights for the improvement of QM for externally
sourced BS by buying companies.
After outlining the sequence of the three research phases, the following sections de-
scribe the various research methods employed and provide a detailed argumentation
for their utilization.
Figure 2: Research phases
Main objective: Description
Main method of
data collection:
Literature
review
Main method of
data analysis:
Conceptual
considerations based on
related
literature
Related paper: Paper A
First research phase Second research phase Third research phase
Main objective: Explanation
Method of
inquiry:Qualitative
Main method of
data collection:Interviews
Main method of
data analysis:
Transcribing,
data matrix, coding, data,
thematic matrix
Related paper: Paper B
Main objective: Testing
Method of
inquiry:Quantitative
Main method of
data collection:Online survey
Main method of
data analysis:
Mann-Whitney-
U test,
structural
equation
modelling
Related paper: Paper C, D
Development of
theories as
research study
builds upon
research study
38 Quality Management Practices for Business Services
from a Buyer‟s Perspective
3.2.2.1 First research phase: Description of the research problem using a review of
related literature
As explicated above, the first research phase provides an in-depth description of the
research problem on basis of a comprehensive literature review. As the review of the
literature, the identification of the research gaps and the formulation of research ques-
tions can already be found in the previous chapter and in the first article of this cumu-
lative doctoral thesis in Appendix A), these research activities will not be further dis-
cussed here.
3.2.2.2 Second research phase: Explanation of the research problem by using a qual-
itative approach
Qualitative research is particularly appropriate in the early stages of research when
comparably little is known about the phenomenon under study (Miles & Huberman,
1994). As shown in Chapter 2, QM practices for BS are not yet well examined from a
buying company‟s perspective and thus the propositions and conceptual framework
presented in the first research phase (see paper in Appendix A) can only be of prelimi-
nary nature. Therefore, it is inadequate to use a quantitative, experiment- or question-
naire-based methodology which neglects context and assumes all variables to be
known (Marshall, 1985) during the second phase of the examination process. Rather,
the second phase uses a qualitative approach in order to present a holistic, in-depth
picture of the adoption of QM practices for BS at buying companies in their natural
settings, based on the analysis of words and the detailed views of informants (Cre-
swell, 2007). On basis of this detailed portrait the preliminary conceptual framework
developed during the first research phase is then refined (Meredith, 1993).
Within the qualitative approach to social science, this thesis applies the method of a
case study which is considered „[…] a phenomenon of some sort occurring in a bound-
ed context‟ (Miles & Huberman, 1994: 25). In particular, it uses an exploratory, multi-
ple, embedded (Yin, 2003) and comparative (Dul & Hak, 2008; Silverman, 2002) de-
sign. It is an exploratory case in so far as this stage of the research process is less con-
cerned with testing existing theory rather than investigate little-understood phenomena
(Marshall & Rossman, 2006) and developing hypotheses for further research (Hancock
& Algozzine, 2006; Reason, 2006). However, the case study is also explanatory in na-
ture as it allows for the refinement of the conceptual framework developed on basis of
a literature review during the first research phase (Meredith, 1993). It is a multiple de-
Quality Management Practices for Business Services from a Buyer‟s Perspective
39
sign, as it takes several buying companies as its basic unit of analysis. At the same
time, however, attention is given to informants from several departments within the
buying company so that it can be labeled an embedded design (Yin, 2003). As scores
of multiple cases are obtained and matched, it can be regarded as a comparative design
(Dul & Hak, 2008).
The usage of case studies is justified by two interrelated factors: (a) the characteristics
of the research questions and (b) the nature of the phenomenon under study.
The research questions of the thesis are first examined in an exploratory and descrip-
tive sense in order to obtain a „thick description‟ (Geertz, 1973: 16) not of the objec-
tive complexities, but the particular situation perceived by the informants (Hancock &
Algozzine, 2006; Stake, 1995). The examination of these questions thus requires a
methodological approach which allows for in-depth information on contextual factors
and their linkage to the phenomenon under study (Madureira, 2004). Yin (2003) con-
siders case studies an appropriate tool to answer both exploratory and explanatory
types of „why‟ and „how‟ questions (Yin, 2003: 5), in contrast to surveys and archival
analysis which are preferred if the research questions are about prevalence, for exam-
ple „how many‟ or „how much‟ (Yin, 2003: 6). The second reason for using a case
study approach is the nature of the phenomenon under study. First, the proposed thesis
wants to examine existing QM practices at existing buying companies. Thus, it deals
with a contemporary context and not „dead past‟ (Yin, 2003: 7). This favors the case
study over the historical method (Yin, 2003). Second, the researcher has no control
over behavioral events which bolsters the case study approach over experiments (Yin,
2003). The adoption of a case study approach therefore seems appropriate for „[…] an
empirical inquiry that investigates a contemporary phenomenon within its real-life
context […]‟ (Yin, 2003:13).
Case selection
The considerate selection of samples is crucial to ensure construct and external validity
of case studies (Eisenhardt, 1989).5 The aim of case sampling is therefore to select
cases that are suited to examine the phenomena under study (Barbour, 2008). Due to
the embedded design of case studies in the proposed thesis, two levels of case sam-
5 Construct validity comprises the establishment of correct operational measures for the concepts being studied
whereas external validity includes the definition of the domain to which a study‟s findings can be generalized (Yin, 2003).
40 Quality Management Practices for Business Services
from a Buyer‟s Perspective
pling have to be distinguished: (a) the level of the buying companies and (b) the level
of individual informants within the buying company.
The selection of buying companies is mainly driven by considerations in terms of
„confirming and disconfirming cases‟ (Miles & Huberman, 1994: 28) which seeks ex-
ceptions and looks for variations (Marshall & Rossman, 2006).
As elucidated in Section 2.3 differences in the adoption of QM practices may exist
between service and manufacturing companies which may be particularly valuable for
answering the research questions. The buying companies were therefore selected ac-
cording to the type of industry (services vs. manufacturing companies). This criterion
was chosen because differences in the utilization of QM practices related to the type of
industry the buying company operates in were expected. In total, eight German manu-
facturing and eight German service companies participated in our case study during
spring and summer 2010.6 This number is in line with Eisenhardt‟s recommendations
regarding the sample size for case studies (Eisenhardt, 1989).
The selection of individual informants within the chosen buying companies followed
the approach of seeking „intensity‟ (Miles & Huberman, 1994: 28) which looks for
intense but not necessarily extreme manifestations of the phenomenon under study
(Marshall & Rossman, 2006). As the design of QM involves many stakeholders within
a buying company (Pfeifer, 2001), it is advisable to include more than one business
function into the target group of the proposed study (Sánchez-Rodríguez & Martínez-
Lorente, 2004). Hence, this thesis gained insights from purchasing and QM representa-
tives as these were shown to be key informants regarding QM practices in their com-
panies in previous research (see, for example, Seth, Deshmukh, & Vrat, 2006a; Zu,
2009). Since van der Valk (2007) pointed out that the business functions actually ap-
plying the externally sourced BS are often key participants in the purchasing process,
we also included other departments responsible for the quality of specific externally
BS into the sample. These were identified during an introductory meeting with the
purchasing and/or QM informants using a „snowball or chain‟ (Marshall & Rossman,
2006: 28) type of sampling.
6 Public institutions or governmental companies are not included as purchasing processes for them are rather
specific and subject to particular legislation which may not be applicable to other companies.
Quality Management Practices for Business Services from a Buyer‟s Perspective
41
Data collection
This thesis used „semi-structured‟ (Rubin & Rubin, 1995: 5) or „standardized open-
ended‟ (Patton, 2002: 342), „in-person‟ (Frey & Mertens Oishi, 1995: 4) interviews as
methods of data collection during the second research phase. Such type of interview
„[…] consists of a set of questions carefully worded and arranged with the intention of
[…] asking each respondent the same questions with essentially the same words.‟ (Pat-
ton, 2002: 342).7
The alleged shortcomings of the chosen type of interview related to „little flexibility‟
(Fontana & Frey, 2005: 702) and the danger of informants providing „socially desira-
ble‟ (Fontana & Frey, 2005: 702) responses were overcome by several means (see also
Collis & Hussey, 2009):
Conscious use of probes and follow-up questions (Rubin & Rubin, 1995) which
were not pre-determined in the standardized open-ended interview schedule.
These types of questions are supposed to enhance the accuracy and honesty with
which questions were answered.
Considerate use of open-ended questions which encourage respondents to fully
give their opinions and perceptions (Bradburn, Wansink, & Sudman, 2004).
Guaranteed confidentiality, which may increase respondents‟ openness. Confi-
dentiality was guaranteed in two ways: (a) by the consent form which was sent to
informants prior to the interview, (b) by mentioning confidentiality at the begin-
ning of the interview.
The familiarity of the researcher with the general topic due to his practical expe-
rience in several positions in purchasing. This basic knowledge potentially de-
creases possible power imbalances between interviewer and interviewee, allevi-
ates „balanced rapport‟ (Fontana & Frey, 2005: 702), and reduces socially desira-
ble responses because the interviewer is seen as a peer among peers.
In addition to these tactics to obtain trustworthy results, careful preparation and trian-
gulation was crucial to ensure construct validity and avoid distortions from interviews
7 Such interviews can be viewed as conversations with the purpose to elicit in-depth answers about percep-
tions, meanings, processes, and problems from informants (Lofland & Lofland, 1997). They thus represent an intermediate choice between a general interview guide or unstructured interview (Bryman, 2004) which does
not use pre-determined ordered and worded questions and the closed, fixed response interview by which in-formants must fit their answers into researcher‟s pre-defined categories (Marshall & Rossman, 2006; Patton, 2002).
42 Quality Management Practices for Business Services
from a Buyer‟s Perspective
being used in isolation (Rubin & Rubin, 1995).8 This thesis used several methods of
triangulation during the second phase of the research process:
First, a system of „member checking‟ (Stake, 1995: 115) was embraced for factual ver-
ification of interview data. This meant that interview transcripts were sent to the inter-
viewees by e-mail within one week after the interview had taken place. The respond-
ents were then requested to review the transcripts for accuracy and content.
Second, in addition to interviews, the thesis also relied on company documents in var-
ious forms as a technique of „data source triangulation‟ (Stake, 1995: 113). Documents
consisted of internal (for example, QM manuals, QM policies or minutes) or publicly
available documents (for example, websites, presentations) of the buying companies.
Such documents possess triangulative value as they can reveal contradictions between
their actual content and prior interview statements. If, however, their content corre-
sponds with the patterns elicited in the interviews, they strengthen confidence in the
reliability and validity of results (Stake, 1995). In cases where factual inconsistencies
occurred, respondents were consulted for clarification via telephone or e-mail as soon
as it was possible.
Data analysis
During the second research phase, this thesis followed a method of data analysis sug-
gested by (Miles & Huberman, 1994) which is outlined in Figure 3. These authors de-
fine data analysis as three interlinked processes of data reduction, data display, and
conclusion drawing and verification (Miles & Huberman, 1994: 10–12).
8 Triangulation strengthens validity by concurrently or sequentially combining methods and sources to com-
pensate for one‟s weaknesses by strengths of a complementary alternative (Bryman, 2006; Stake, 1995).
Quality Management Practices for Business Services from a Buyer‟s Perspective
43
Figure 3: Process of data analysis during the second research phase
Data reduction starts even before data collection with the specification of research
questions, the conceptual framework for analysis, the case selection and the definition
data collection methods. During and after the data collection period, data reduction
proceeds with abstraction, coding and identification of themes. Data display is the or-
ganized assembly of reduced data that permits the drawing of conclusions. It often in-
cludes instruments like matrices, graphs, charts etc. and begins with data collection.
Finally, drawing of conclusions and verification involves the interpretation of dis-
played data. These processes are not treated as clear-cut sequential actions but as an
„interactive, cyclical process‟ (Miles & Huberman, 1994: 12).9 This thesis exploited
the approach described above as follows:
Data reduction started with the decision on which research questions (see Section 3.1),
which conceptual framework (see Appendix A), which cases and which data collection
methods to adopt. After interviews were conducted, the transcripts as the main source
of evidence were read several times to increase familiarity with the topic. Prior to and
after the interviews, the different documents and audio-visual material mentioned be-
fore were scanned. To keep track of the different sources of evidence, a data matrix
was created (Miles & Huberman, 1994).
The next step of data reduction comprised the coding of the transcribed interviews and
the other data sources. The coding „start list‟ (Miles & Huberman, 1994: 60) encom-
9 In that sense, the chosen approach constitutes an intermediate option between pure deductive or inductive
types of data analysis (Bryman, 2004).
Data collection period
Data reduction
Data displays
Conclusion drawing/verification
Anticipatory During
During
During Post
Post
Post
= Analysis
44 Quality Management Practices for Business Services
from a Buyer‟s Perspective
passed the concepts derived from the preliminary conceptual model developed during
the first research phase and in the first article presented in Appendix A. This repre-
sented an a priori coding frame following the view, that „[…] coding must start with a
frame that is well grounded in a theory or conceptual scheme‟ (Araujo, 1995: 97). The
coding process was repeated several times to reduce and/or refine the given infor-
mation regarding the categories considered.
The next stage was characterized by the attempt to display the coded data in order to
allow conclusions to be drawn. The coded data was transferred into a large „thematic
conceptual matrix‟ (Miles & Huberman, 1994: 131) with help of available software.
This matrix contrasted the various cases by dissecting the different interviews by
themes and their categories so that all interview statements on a specific theme or cat-
egory accumulate under a single label. It thus allowed an efficient comparison of the
cases. In the final step of data analysis, patterns of the utilization and perceptions on
the usage of QM practices were detected which allowed expounding hypotheses for
the third research phase of the proposed thesis.
3.2.2.3 Third research phase: Hypothesis testing by using a quantitative approach
The third research phase builds upon the results of preceding ones. It has the objective
of testing the propositions derived during the second stage. The following paragraphs
roughly describe how the approach looked like and what the reasons for choosing it
were. They will first sketch out the online survey as method of data collection and then
illustrate how structural equation modeling (SEM) was utilized as main method of data
analysis. For a detailed illustration of the results of this research phase, please refer to
the third and fourth article of this cumulative doctoral thesis in Appendix C and D.
Online survey
The thesis used a self-administered online survey (Fink, 2003) as method of data col-
lection for the third research phase. An online survey offers several advantages in con-
trast to mail or in-person surveys and interviews (Dillman, 2007; Wright, 2005). First,
it promises to be more efficient by reaching more people at the same time. This allows
the researcher to collect data while working on other tasks simultaneously. Second, it
may require less financial resources than a traditional survey due to savings on paper,
postage and travel. Third, it offers the opportunity to reach respondents who would
otherwise be hesitant to meet face-to-face or fill in mail-surveys as it is quicker to an-
Quality Management Practices for Business Services from a Buyer‟s Perspective
45
swer. The danger of multiple answers from the same respondent was counteracted by
response tracking which identified multiple responses from the same e-mail address
(Wright, 2005). In an invitation e-mail containing contact data and explaining the pur-
pose of the study, respondents were offered the provision of the survey results in order
to stimulate response rate.
Before the online survey was sent out, the survey items were operationalized. Opera-
tionalization in this context is understood as development of a measurement model
(Homburg & Giering, 1996). In doing so, this thesis made extensive use of existing
literature in the areas of service quality and QM. Whenever possible, the constructs
developed in earlier research were modified and/or applied. The developed question-
naire was then pre-tested by seven purchasing managers, six quality managers and four
academics from the area of operations management in order to clarify misunderstand-
ings and add or delete items whenever required (Zhu, Sarkis, & Kee-hung, 2008). The
online survey mainly asked for the degree of agreement with predefined statements
measured on a seven-point Likert scale with end points of “not at all (=1)” to “to the
fullest extent (=7)”. This approach is most useful when the items to be asked are built
on an exploratory pre-study and thus there exists sufficient knowledge about the possi-
ble answers (Fink, 2003).
As the target population of the survey encompassed Austrian, German and Swiss com-
panies purchasing BS, cooperation with the Austrian Association Material Manage-
ment, Purchasing and Logistics (BMÖ), the German Association Materials Manage-
ment, Purchasing and Logistics (BME) and the Swiss Association Material Manage-
ment and Purchasing (SVME) to obtain contact data was established. Furthermore, a
contact list from the author‟s university was used. In total, 1,977 companies were iden-
tified and contacted by e-mail. 664 e-mails were undeliverable because contact data
were out of date. This left us with a list of 1,313 usable e-mail addresses. Following
the Tailored Design Method for web surveys (Dillman, 2007), we sent out up to three
reminders with a link to the survey to subjects which have not responded to the previ-
ous e-mails. In total, 513 responses were received. Responses with missing values for
the items relevant to the third and fourth paper of this cumulative thesis were omitted
from the related further analysis. Thus, a sample of 252 for the third article and 260
complete questionnaires for the fourth article remained. This left us with a response
rate of 19.2% for the third and 19.8% for the fourth paper respectively (see Appendix
A and D). These response rates are in line with other studies in QM (for example, Das
et al., 2000; Ravichandran & Rai, 2000) and comparable to other research works in the
46 Quality Management Practices for Business Services
from a Buyer‟s Perspective
wider field of organizational research (Yu & Cooper, 1983). The sample included
companies buying BS from a broad range of industries. Also, the companies ranged
from small and medium enterprises to multinational corporations. Most of the respons-
es came from Germany, followed by Switzerland and Austria. The respondents major-
ly held positions such as head of purchasing or purchasing manager followed by head
of QM, chief executive officer (CEO) and quality manager. Furthermore, many re-
spondents represented other positions such as head of SCM, head of operations, head
of marketing etc. indicating that they were intensive consumers of BS purchased by
their company. We therefore concluded that the respondents possessed the required
knowledge to answer the questions appropriately.
In order to minimize key-informant, common-method, and non-response bias, several
tactics were applied (for a more detailed description please refer to the third and fourth
paper of this thesis in Appendix A and D):
If the contact persons regarded themselves as non-experts regarding QM practic-
es for BS within their company, they were asked to forward the questionnaire to
someone within their company who is more knowledgeable. Furthermore, the
key informants were requested to fill in the questionnaire with other experts who
were responsible for the design of the QM practices in their company (Kumar,
Stern, & Anderson, 1993).
Common-method error was counteracted by protecting respondent anonymity,
explaining the usefulness of the study, offering a copy of the results (Huber &
Power, 1985), careful selection of scale items as well as conduction of the Har-
man‟s single factor test (Podsakoff, Mackenzie, Jeong-Yeon, & Podsakoff,
2003). The Harman‟s single factor test revealed that the relevant factors used in
the survey fulfilled the eigenvalue-greater-than-one criterion and that at least
three factors are needed to explain a variance of more than 50%. Therefore, we
concluded that there is no significant common-method bias (cf. Podsakoff & Or-
gan, 1986).
Non-respondent bias was measured by comparing early with late respondents us-
ing t-tests, as non-respondent bias is often congruent with late-respondent bias
(Armstrong & Overton, 1977). The t-tests did not show any significant differ-
ences between the data from early and late respondents.
Quality Management Practices for Business Services from a Buyer‟s Perspective
47
Structural equation modeling (SEM)
After the collection of data, the research model was analyzed using the Mann-
Whitney-U test and SEM.
The Mann-Whitney-U statistic is a non-parametric test for the identification of signifi-
cant differences between independent samples (Mann & Whitney, 1947). It was used
in the third paper of this cumulative thesis to inspect potential dissimilarities in the
adoption of QM practices, their effects, potential barriers and determinants between
manufacturing and service as well as large and small companies in the sample. The
usage of the Mann-Whitney-U check was stipulated as our questionnaire consisted of
7-point ordinal Likert scales which are not normally distributed (Barnes, Cote,
Cudeck, & Malthouse, 2001). We adopted the Mann-Whitney-U test on the level of
single items and aggregated constructs in order to obtain more detailed results. The
null hypothesis stated that there is neither a statistically significant difference between
the mean scores of manufacturing and service nor between small and large companies.
SEM can be considered a hybrid between interdependence and dependence techniques
of multivariate analysis using factor and multiple regression analysis (Hair, Jr., Black,
Babin, Anderson, & Tatham, 2006). It was utilized for the data analysis in the fourth
paper of this thesis. SEM has the potential to best reflect the research context of the
proposed thesis for several reasons (cf. Hair, Jr. et al., 2006):
First, SEM can incorporate observable as well as unobservable, latent constructs (Byr-
ne, 2010), i.e. abstract entities which represent „[…] the „true‟, non-observable state or
nature of a phenomenon‟ (Bagozzi & Fornell, 1982: 24). These are measured by mul-
tiple observable indicators representing them (Homburg & Giering, 1996). In this the-
sis, multi-dimensional latent constructs, such as the QM practices and performance
constructs are major components of the research framework. Therefore, this element of
SEM is a crucial advantage. Second, SEM allows us to test the complex set of inte-
grated constructs of the research model and their relationships simultaneously. This
contrasts other types of multivariate analyses, for example, canonical correlation or
multiple regression analysis which analyze single constructs and relationships sequen-
tially (Hair, Jr. et al., 2006). As this thesis also wants to investigate the relationships
among QM practices as well as between them and performance constructs, this charac-
teristic of SEM was essential for our analysis. Third, SEM allows the simultaneous
“estimation of multiple interrelated dependence relationships” (Hair, Jr. et al., 2006:
711). This means that SEM can deal with structural models in which dependent varia-
48 Quality Management Practices for Business Services
from a Buyer‟s Perspective
bles become independent ones in subsequent relationships. Since this is predicted for
some constructs by the conceptual frameworks (for example, service quality, satisfac-
tion), this characteristic favors SEM over other multivariate techniques such as canon-
ical correlation where only one relationship at a time can be estimated.
Two estimation techniques for SEM are usually differentiated: Maximum likelihood
(ML) covariance structural analysis and partial least squares (PLS) variance analysis
(Chin, 1998; Wang, Po Lo, Chi, & Yang, 2004). Several characteristics of PLS fa-
voured its usage to ML techniques (Henseler, Ringle, & Sinkovics, 2009). PLS pro-
vides latent variables scores, i.e. proxies of the constructs, which are measured by mul-
ti-dimensional indicators. As it is one of the aims of this study to predict the extent to
which QM practices for externally sourced BS affect the performance of buying com-
panies, this feature of PLS became important. Furthermore, PLS can provide estima-
tions in complex models with many latent and manifest variables (Henseler et al.,
2009). As our research with 11 latent variables can be considered rather complex, this
characteristic spoke for the adoption of PLS. We applied smartPLS 2.0 M3 (Ringle,
Wende, & Will, 2005) for the analysis of our path model.
In order to develop a structural equation model, this thesis used a two-step approach
proposed by Anderson & Gerbing (1988). It consists of the development of the meas-
urement model and its validation and the actual testing of the structural model. This
approach allows for the testing of significance of all pattern coefficients. In addition, it
can be assessed whether any structural model would give acceptable fit and compari-
sons between the model of interest and next more likely alternatives are made possible.
Furthermore, it allows an independent test of the measurement and structural model
(Anderson & Gerbing, 1988). The development and the test of the measurement (scale
reliability, content validity, unidimensionality, discriminant validity, predictive validi-
ty) and the structural model (path coefficients, coefficient of determination, predictive
power and effect size) are presented in detail in the fourth article of this thesis in Ap-
pendix D.
Quality Management Practices for Business Services from a Buyer‟s Perspective
49
4. Publication structure and key results
This chapter wants to provide a short overview of the four scientific papers which
form the cornerstones of this cumulative doctoral thesis. The main focus lies on their
content and the presentation of the major results.
4.1 Paper A: Quality Management Practices for Business Services:
A Research Agenda from a Buyer’s Perspective
The first paper (see Appendix A) was published as:
Holschbach, E. & Hofmann, E. Quality Management Practices for Business Services:
A Research Agenda from a Buyer‟s Perspective. In: Hallikas, J.; Kähkönen, A.-K.;
Lintukangas, K.; Virolainen, V. M. (Eds.): Supply Management - Missing Link in Stra-
tegic Management? Proceedings of the 19th Annual IPSERA Conference, 16th-19th
May 2010, Lappeenranta, Finland: Lappeenranta University of Technology
The main objective of the first paper of this cumulative doctoral thesis is to describe
the practical and theoretical problem of managing the quality of externally sourced BS
from the perspective of buying companies. It also wants to make a first theoretical
contribution by providing an overview of existing research regarding QM by buying
companies for incoming BS. Furthermore, it guides subsequent research by developing
a preliminary conceptual model taking potential determinants, QM practices as well as
their effects on firm performance into consideration.
The first paper clarifies the significance of BS for buying companies and expounds a
conceptual framework and related preliminary propositions as well as a potential re-
search methodology on basis of a review of relevant literature in the area of service
quality and QM. On basis of previous research findings the paper examines what the
major determinants of QM practices for externally sourced BS at buying companies
may be and how they may impact service quality and business performance. The paper
proposes that (a) service quality dimensions, (b) the application of business services by
buying companies and (c) the type of industry may be major determinants of the de-
sign of QM practices for business services by buying companies. Furthermore, it sug-
gests that QM has a positive effect on the quality of externally sourced BS and on sales
revenues or cost efficiency moderated by the application of the BS. Through increas-
50 Quality Management Practices for Business Services
from a Buyer‟s Perspective
ing sales revenues or decreasing cost by enhancing service quality, buying companies
may raise their profits. Thus, the benefits of QM for externally sourced business ser-
vices may outweigh the costs for its implementation and maintenance.
4.2 Paper B: Exploring quality management for business services
from a buyer’s perspective using multiple case study evidence
The second paper (see Appendix B) was published in the International Journal of Op-
erations and Production Management as:
Holschbach, E., & Hofmann, E. 2011. Exploring quality management for business ser-
vices from a buyer‟s perspective using multiple case study evidence. International
Journal of Operations and Production Management, Vol. 31, Iss. 6, pp. 648-685.
The major goal of the second paper of this cumulative doctoral thesis is to describe
how buying companies manage the quality of their externally sourced business BS and
to provide first potential explanations for their activities in this area. Furthermore, it
intends to sharpen and refine the conceptual model of the first paper which was solely
based on theoretical considerations. In addition, it expands the basis for the definition
of the hypotheses, which are then statistically tested in the subsequent two papers.
The authors investigate how buying companies manage the quality of their externally
sourced BS. The paper explores how QM for BS influences the performance of the
buying company and what the major determinants of QM in this context are. The pa-
per presents case evidence from eight manufacturing and eight service companies op-
erating in Germany. On basis of the case study, the preliminary conceptual model pre-
sented in the first article is honed in order to provide more appropriate potential expla-
nations for the research problem.
The paper suggests that buying companies do not yet utilize QM for externally sourced
BS to its full potential as they have not realized comprehensive QM systems. Rather,
they focus on single instruments within QM practices such as provider evaluation, ser-
vice level agreements, key performance indicators (KPI) etc. These were implemented
in the same way for all types of services, not reflecting the peculiar characteristics of
the particular service. Furthermore, practices such as customer involvement, process
management and service design have not yet received the attention they may deserve.
Quality Management Practices for Business Services from a Buyer‟s Perspective
51
Overall, QM for incoming services has been associated with creating value to the
company as its benefits outweigh the costs for its implementation and maintenance. In
line with the conceptual model of the first paper, the paper proposes that there is a
strong link between QM and enhanced service quality. Improvements in service quali-
ty lead to higher satisfaction of internal and/or external customers. Thus, the concept
of satisfaction is introduced to the conceptual model. In contrast to the conceptual
model presented in the first paper, the relation between QM and the reduction of costs
was seen as direct but weak. Furthermore, the suggested effects of QM via the market
route by which improvements of the quality of goods finally result in higher sales vol-
ume could not be detected by the study presented in the second paper (cf., for example,
Deming, 1982; Garvin, 1984; Garvin, 1988; Molina-Azorín et al., 2009; Sousa &
Voss, 2002; White, 1996).
The major determinants affecting the intensity of QM are the usage of the service by
the buying company, the risk associated with quality failures, the degree of standardi-
zation and volume of the purchased service. Whereas previous research on QM puts
forward that differences in the application of these practices exist between manufactur-
ing and service companies (Benson, Saraph, & Schroeder, 1991; Quazi et al., 1998;
Singh, Feng, & Smith, 2006), the results of the second paper could not discover major
distinctions between industries. Rather, manufacturing and service companies seemed
to design the comparably few practices they do utilize for services in a similar way. In
addition, an influence of the service quality dimensions on the design of QM practices
could also not be discerned in the second paper due to the uniform adoption of QM
practices for all types of business services. It has to be stressed, however, that the case
study methodology did not allow for examining the question how widespread the us-
age of QM practices for BS is in manufacturing and service environments. Therefore,
as suggested by the literature, more companies from manufacturing might still apply
QM for incoming services than service companies. Consequently, this issue was sub-
ject of the third paper.
4.3 Paper C: Comparison of quality management for externally
sourced business services
The third paper (see Appendix C) was submitted to the International Journal of
Quality & Reliability Management:
52 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Holschbach, E., Comparison of quality management for externally sourced business
services. International Journal of Quality & Reliability Management: Submitted.
The central aim of the third paper is to test the propositions regarding the adoption of
QM practices for BS services, their effects on organizational performance as well as
their implementation barriers and determinants and thus to provide statistically gener-
alizable results. Furthermore, it checks for the influence of contextual factors such as
type of industry and firm size on QM practices for incoming BS. The findings show
that significant differences exist in the application of QM practices for services and
their effects on performance between manufacturing and service as well as large and
small companies. Only minor differences could be detected, however, regarding barri-
ers to QM implementation and its determinants.
The third paper investigates to which extent buying companies use QM practices for
their externally sourced BS and if differences between manufacturing and service as
well as between large and small companies exist regarding their usage, their effects,
potential impediments for their implementation and their determinants. The study col-
lected data from a total of 252 companies mainly from Austria, Germany and Switzer-
land using an online survey. Significant differences in the data were identified using
the Mann-Whitney-U test.
The study showed that - on the level of the whole sample - the most intensively used
QM practices for externally sourced BS in descending order of their mean values are
service design, workforce management, management support, customer involvement,
quality information, process and provider management. Thus, the third paper partially
substantiates the findings of the second paper signifying that customer involvement
and process management have not yet received much attention by practitioners.
Regarding the four sub-samples, several significant differences could be identified. For
example, service firms demonstrated more support by top management for quality is-
sues for externally sourced BS and a more intensive customer involvement than manu-
facturing companies.10
Furthermore, large companies showed higher levels in the
adoption of provider involvement, quality information, service design and process
management than small ones.
10 Please note that in this section only significant differences between the sub-samples on the construct level are
discussed. For a more detailed description of results on the item level please refer to the third paper of this thesis in Appendix A.
Quality Management Practices for Business Services from a Buyer‟s Perspective
53
The respondents experienced positive effects by using QM practices for externally
sourced BS. Overall, the strongest outcomes were the increase of service quality and
cost efficiency followed by further effects (for example, increase of productivity, en-
hancement of competitive position) and rise of customer satisfaction. However, service
companies achieved more additional effects than manufacturers and larger companies
could attain significantly higher levels of customer satisfaction and cost efficiency
than small firms.
The results relating to the obstacles faced with the implementation of QM practices for
externally sourced BS imply that, overall, the heterogeneity and the necessity to sub-
jectively evaluate the quality of services were perceived as major impediments to suc-
cessful QM implementation. Neither on the construct nor on the item level could major
discrepancies between manufacturing and service as well as large and small companies
be uncovered. The only exception was the lack of support by top management which
was more critical for large than for small companies.
Regarding the determinants of the design of QM practices for incoming BS, the study
found out that buying companies focus their QM activities on services whose quality
failure would represent a critical risk, which represent an important share of their pur-
chasing volume, are important to the production process or transferred to the buying
company‟s customers. Thus, the third paper underlines the importance of the usage of
the BS by the buying company as a major parameter of the adoption of QM practices.
This finding is in line with the first and second article. In accordance to the second
paper, the third article also identifies perceived risk and purchasing volume as major
factors influencing the design of QM practices for externally sourced BS.
No difference in the determinants could be detected between manufacturing and ser-
vice firms. However, on the level of constructs, the determinants of QM for incoming
services significantly differed between large and small companies.
4.4 Paper D: Quality management for business services
from a buyer’s perspective
The fourth paper (see Appendix D) was submitted to the International Journal of Op-
erations Management and is currently under review:
Holschbach, E., & Hofmann, E. Quality management for business services from a
buyer‟s perspective. International Journal of Operations Management: Under review.
54 Quality Management Practices for Business Services
from a Buyer‟s Perspective
The main purpose of the fourth paper is to explain and test the relationships between
QM practices for BS and between them and measures of organizational performance.
Furthermore, it wants to investigate the relationships between the various performance
measures. Based on the conceptual model developed in the previous papers and an
additional literature review regarding the relationships among quality management
practices, this article first develops a research model. The associated hypotheses are
then tested using cross-sectional survey data from 260 manufacturing and service
companies mainly operating in Austria, Germany and Switzerland. The data analysis
using SEM supports the proposed hypotheses.
The analysis reveals that top management support, workforce management and quality
information have positive direct links to other QM practices. They can thus be consid-
ered crucial infrastructure QM practices when regarding QM for BS from a buying
company‟s perspective. Provider involvement, process management, service design
and customer involvement, however, exert positive influence on performance directly.
Thus, they are important core practices for QM for BS. Furthermore, the results of the
fourth paper underline the crucial role of customer involvement for QM of externally
sourced BS from a buying company‟s perspective as it has a strong, positive and direct
effect on service quality as well as on customer satisfaction. Therefore, customer in-
volvement seems to be a crucial ingredient of QM for BS.
Regarding the effects of QM practices on organizational performance, the findings of
the fourth paper corroborate the ones from the previous research as they suggest that
the adoption of QM practices for BS is positively related to service quality. Service
quality is positively and strongly related to cost efficiency and the satisfaction of inter-
nal or external customers. The investigation of the relationships amongst performance
measures indicates their interrelation. It becomes apparent that a buying company can-
not only raise the satisfaction of internal and external customers by enhancing the
quality of externally sourced BS by means of QM, but it can also enlarge cost efficien-
cy, i.e. lower operating costs. Overall, these benefits of QM practices for externally
sourced BS were perceived to outweigh the sacrifices of their implementation and
maintenance which was measured by the construct of value of QM.
Quality Management Practices for Business Services from a Buyer‟s Perspective
55
5. Overall conclusion
After having presented the publication structure and the major results of the four pa-
pers of this cumulative doctoral thesis, this chapter summarizes the objectives of this
research project and the related research questions as well as the managerial and theo-
retical contributions. Furthermore, it identifies several limitations and suggests corre-
sponding routes for future research.
5.1 Summary of the objectives and research questions
It could be shown that several gaps in the research exist regarding the management of
quality of incoming BS from a buying company‟s perspective (see Chapter 2). To a
large extent, these are originated in the fact that academic research on service quality
has focused on B2C services and research on QM has mainly adopted the perspective
of a provider of goods or services.
This doctoral thesis aspires to fill these gaps by answering the questions how buying
companies use QM practices to manage the quality of their externally sourced BS, how
the usage of these QM practices is related to service quality and business performance
of the buying company and what the major determinants of the design of these QM
practices are.
Thus, the objective of this thesis is to make a contribution to theory in the area of QM
by identifying how QM practices are implemented by buying companies for their ex-
ternally sourced business services. Furthermore, it wants to provide practitioners with
recommendations on how to design the use of these QM practices.
5.2 Theoretical implications
This thesis provides several theoretical insights into the QM for BS from a buying
company‟s perspective.
First, it analyzes QM from the perspective of a buying company, i.e. from a different
perspective than the one taken by most of the previous studies, and for BS, i.e. for a
different object of QM than of many other studies in QM. Examining research ques-
tions from a different angle is important for increasing the generalizability and exten-
56 Quality Management Practices for Business Services
from a Buyer‟s Perspective
sion of previous findings (Tsang & Kwan, 1999). Furthermore, an investigation from
this perspective seemed advisable due to the significance of BS for most buying com-
panies (see Section 1.1).
Second, this thesis could detect several peculiarities in the adoption of QM practices
for BS by buying companies. For example, it uncovered the crucial role of customer
involvement for QM of externally sourced BS. Earlier research did sometimes not in-
clude relationships with customers into the set of QM practices or could not discover
positive direct effects of customer involvement on firm performance when investigat-
ing QM for goods (for example, Anderson, Rungtusanatham, Schroeder, & Devaraj,
1995; Saraph et al., 1989; Flynn et al., 1995; Sila & Ebrahimpour, 2005; Kaynak &
Hartley, 2008). By contrast, this research project revealed a strong, positive and direct
relationship between customer involvement and service quality as well as customer
satisfaction. Therefore, customer involvement seems to be a crucial component of QM
for BS and should not be omitted in future research.
Third, the results suggest that QM has positive effects on organizational performance
when it is implemented for externally sourced BS. This finding transfers and substan-
tiates results of earlier studies which found positive relationships between the utiliza-
tion of QM for outgoing goods by manufacturing companies (for example, Dow et al.,
1999; Cua et al., 2001; Kaynak & Hartley, 2008; Sila & Ebrahimpour, 2005; White,
1996). This thesis shows that the adoption of QM for BS enhances the quality of the
incoming services. Higher levels of service quality then lead to an increase of satisfac-
tion of internal and external customers as well as cost efficiency. These benefits out-
weigh the sacrifices for the implementation and maintenance of QM and thus create
value for the buying company.
Fourth, this work not only investigates how buying companies use QM for their exter-
nally sourced BS and what its effects are but also what criteria determine the design of
QM. The results exhibit that perceived risk, usage of the service by the buying compa-
ny and purchasing volume are major factors according to which buying companies
align their QM for BS. These results may grant room for further analysis, which will
be discussed in Section 5.4.
Fifth, the direct and indirect relationships among QM practices, between these practic-
es and several measures of organizational performance and within the performance
measures themselves (see also previous paragraphs) were examined. We thus followed
a call by Kaynak (2003) who recommended further research regarding the direct and
indirect relationships of QM practices as the number of studies trying to identify them
Quality Management Practices for Business Services from a Buyer‟s Perspective
57
is rather limited. The analysis of this complex network of relationships – among other
things – disclose that top management support, workforce management and quality
information have positive direct links to other QM practices. They can thus be consid-
ered crucial infrastructure QM practices when regarding QM for BS from a buying
company‟s perspective. Provider involvement, process management, service design
and customer involvement, however, exert positive influence on performance directly.
Thus, they are important core practices for QM for BS. As this classification of QM
practices contrasts some previous analyses for QM of goods (cf. Flynn et al., 1995; Zu,
2009), we suggest that future research should take the object (i.e. goods or services) of
QM into account when assigning practices to these categories.
Sixth, by identifying and analyzing differences related to QM for BS between manu-
facturing and service as well as between large and small companies, this study con-
tributed to the existing body of contingency research in operations management fol-
lowing a call by Sousa & Voss (2008). As we found several significant differences
regarding the application of QM practices, its effects and determinants, our results cast
some doubt on the universal applicability of QM suggested by earlier research on QM
for goods (for example, Crosby, 1979; Deming, 1986; Flynn et al., 1995; Hendricks &
Singhal, 1997; Juran & Blanton Godfrey, 2000). Rather, they signify that studies on
QM may not only consider the perspective of the user of QM (i.e. buying or selling
company), the object of QM (i.e. goods or services) but also contingent factors such as
industry and size of company.
5.3 Managerial implications
From a managerial perspective, key findings from our study can be summarized as
follows:
First, the thesis underlines the significance of externally sourced BS for buying com-
panies. It is estimated that their share in the total purchasing volume lies between 15
and 28% for manufacturing companies (BME, 2005a: 5; Centre for Management De-
velopment, 2005). This portion may even grow in the future due to a continuous trend
towards outsourcing (Cox et al., 2005; Ellram et al., 2007; Fuller, 1998; Miettinen et
al., 2005; Murray & Kotabe, 1999; van der Valk & Rozemeijer, 2009). Furthermore,
the share of services on many product offerings is increasing due to a risen demand for
augmented core goods (Nilsson et al., 2001; Wise & Baumgartner, 1999). This will
also call for a more systematic approach to managing the service quality delivered by
58 Quality Management Practices for Business Services
from a Buyer‟s Perspective
external providers. So far, however, most companies have not yet implemented com-
prehensive QM systems but mainly focused on single practices which were mostly
used in the same way for all types of services.
Second, our results show that QM for externally sourced BS is associated with positive
effects such as enhanced service quality resulting in higher customer satisfaction and
reduced costs. The positive effects of QM for BS are perceived to exceed the costs of
its implementation and maintenance. It may therefore be a profitable investment for
buying companies to expand their efforts in QM for services.
Third, this thesis ascertains that the various QM practices for BS should not be imple-
mented in isolation but in an integrated manner. The study has shown that the various
practices are highly interrelated. Therefore, implementing only a limited set of QM
practices may not lead to the expected positive results. However, the findings suggest
that a sequential launch including all the QM practices for externally sourced BS may
enable their full potential. For example, buying companies may first secure the full
support by top management and introduce the practices which were identified as infra-
structure ones in our study, i.e. workforce management and quality information. Em-
ployees who are well trained in QM for BS and an efficient system of quality data will
then alleviate the launch of the other core practices, i.e. supplier and customer in-
volvement, service design and process management. Special attention should be given
to the implementation of a thorough customer involvement as our study shows that it is
positively, strongly and directly related to service quality and customer satisfaction.
Therefore, it can be considered a key practice of QM for externally sourced BS. This
also means that functional borders, for example, between purchasing and departments
consuming BS within buying companies should be reduced when purchasing BS. Ra-
ther, purchasers and quality managers should work very closely together with their
internal or external customers in cross-functional teams in order to determine their re-
quirements and obtain regular feedback regarding the quality of externally sourced BS.
Fourth, the results regarding the determinants of QM provide valuable recommenda-
tions for their utilization. For example, it may be necessary for a buying company real-
izing QM for externally sourced BS to implement it sequentially. Our results indicate
that the perceived risk associated with quality failure, purchasing volume and usage of
the service (for example, consumption for the production process or transfer to exter-
nal customers) are suitable criteria for managers to discover the services a buying
company should focus its QM activities on. Thus, companies may apply these factors
to prioritize the services they will incorporate into a system of QM. For example, these
Quality Management Practices for Business Services from a Buyer‟s Perspective
59
criteria can represent the axes of service portfolios according to which the QM will be
realized.
Fifth, this thesis reveals significant differences in the adoption of QM for BS between
manufacturing and service as well as large and small companies. In contrast to QM for
goods, service companies surpass manufacturers in the use of management support and
customer involvement when regarding QM for incoming services. This means that
manufacturing companies which strive to improve their QM for services can learn
from service providers. In particular, they may try to imitate the knowledge of service
providers regarding the integration of requirements and feedback of their external and
internal customers as well as the analysis of their satisfaction in order to augment the
quality of the services they purchase. Large companies outperformed small ones in the
application of QM practices for externally sourced BS and could also achieve higher
levels of positive effects on performance. For managers of small firms, this means that
it may be worthwhile extending their efforts into QM for incoming services. For in-
stance, they may invest more time and resources into improving their activities of ob-
taining quality information, thorough service design, and process or provider manage-
ment.
Sixth, our analysis showed that the barriers associated to the implementation of QM
for BS are similar among industries and companies of different sizes. They are mostly
related to the peculiar characteristics of services such as heterogeneity and intangibil-
ity rather than more specific organizational factors such as degree of specification,
software support etc. For purchasing managers this means that they should attempt to
reduce the impact of service characteristics before taking further QM activities. As an
example, they may try to reduce heterogeneity by standardizing externally sourced BS.
Furthermore, they may establish systems of receiving customer feedback and analyz-
ing their satisfaction with the purchased services in order to systematically monitor
subjective evaluations of service quality.
Seventh, from the perspective of a service provider, our findings suggest that compa-
nies offering a business service can support buying companies in QM for BS and may
thus be able to distinguish themselves from their competitors. In particular, service
providers should thoroughly involve the service consumer (for example, the internal
department of the buying company consuming the service or the external customer of
the buying company) into the service production and delivery process as customer in-
volvement has proven to be a key QM practice. Moreover, processes for quality ap-
proval and evaluation should be made as easy as possible for the buying company.
60 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Service providers could, for instance, regularly survey the satisfaction of customers
and report these data to the purchasing responsibles or they could offer easy-to-use
electronic systems for the approval of delivered services by the buying company.
5.4 Limitations and future research
We are confident that this thesis represents some valuable first insights to the question
how buying companies manage the quality of their externally sourced BS. Neverthe-
less, it also has some limitations which may, however, provide some useful inspiration
for future research. They can be subsumed as follows:
We useed cross-sectional data to test our hypotheses which captured the situation
at buying companies at one point in time (Fink, 1995). QM practices and their ef-
fects may, however, be constructs which are dynamic in nature. Thus, their de-
velopment may change over time and might be better examined over an extended
period (Lakhal, 2009). In order to observe the realization of QM for externally
sourced BS and its complexities or barriers, future research may therefore use
longitudinal studies.
Furthermore, our results are based on perceptional, self-reported rather than ob-
jective, publicly available archival information. We decided to use perceptional
data on basis of three grounds: First, the case studies performed before the survey
showed that buying companies do not yet regularly collect data regarding their
QM for externally sourced BS or the performance measures used in this study.
Second, objective or archival data are often at the wrong level of aggregation,
out-of-date or unavailable for small and medium companies (Boyd, Dess, &
Rasheed, 1993). We thus opted to use perceptional data in order to maintain a
comparably large sample. Third, in order to make more definite statements about
QM and its effect on organizational performance, we refused to use archival data
on global organizational outcomes, such as market share, profitability, stock
price etc. According to Hackman & Wageman (1995), these can be the result of
various influential factors and may therefore not directly relate to QM practices
alone. Future research should nevertheless attempt to include more objective data
into the examination of QM practices for externally sourced BS.
The study examines the QM for all BS which were externally purchased by the
participating companies. No differentiation between, for example, services which
Quality Management Practices for Business Services from a Buyer‟s Perspective
61
represent a high or a low portion of a company‟s purchasing volume or whose
quality failure represents a critical or non-critical risk to the buying company
were made. Future research may examine how such factors affect the adoption of
QM in more detail, for example, by conducting case studies.
Furthermore, our data collection only relates to one side of the buyer-supplier
dyad. However, our study shows that service quality is to a significant part de-
fined during the service design for which the provider was seen as more knowl-
edgeable. Therefore, future studies should incorporate information from the sup-
plier in order to examine how the service provider contributes to successful QM.
62 Quality Management Practices for Business Services
from a Buyer‟s Perspective
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80 Quality Management Practices for Business Services
from a Buyer‟s Perspective
A Quality Management Practices for Business Services:
A Research Agenda from a Buyer’s Perspective
Publication information
The first paper was published as:
Holschbach, E. & Hofmann, E. Quality Management Practices for Business Services:
A Research Agenda from a Buyer‟s Perspective. In: Hallikas, J.; Kähkönen, A.-K.;
Lintukangas, K.; Virolainen, V. M. (Eds.): Supply Management - Missing Link in Stra-
tegic Management? Proceedings of the 19th Annual IPSERA Conference, 16th-19th
May 2010, Lappeenranta, Finland: Lappeenranta University of Technology
Summary
This paper is part of a larger research project investigating how buying companies ap-
ply practices of quality management for their externally sourced business services.
Based upon a literature review in the areas of service quality and quality management,
the paper will present a research framework, preliminary propositions and a potential
research methodology. The insights obtained can assist purchasers to decide on quality
management practices to best suit certain types of business services. Service providers
will benefit by better understanding which practices of quality management buying
companies use and thus become able to adjust their service offerings to better match
requirements.
Keywords: Services purchasing, quality management, service quality
A.1 Introduction
The importance of services for economies and companies is significant and still in-
creasing (Axelsson & Wynstra, 2002; Jackson, Neidell, & Lunsford, 1995; OECD,
2000; Schneider & White, 2004). However, despite their significance, most purchasing
departments have focused on the optimization of the supply of goods during the last
years (Axelsson & Wynstra, 2002; Ellram, Tate, & Billington, 2007; van der Valk,
2008; van der Valk, 2007). Similarly, the academic literature predominantly has been
focusing on the supply of goods (Bals, Hartmann, & Ritter, 2009; Cox, Chicksand,
Quality Management Practices for Business Services from a Buyer‟s Perspective
81
Ireland, & Davies, 2005; Ellram et al., 2007; Smeltzer & Ogden, 2002; van der Valk &
Rozemeijer, 2009; van der Valk, 2008; Wynstra, Axelsson, & van der Valk, 2006) and
on the purchasing activities before the actual purchase is completed Day & Barksdale,
Jr., 1994; van der Valk, 2008; van der Valk & Rozemeijer, 2009).
In particular, the activities after the actual purchase and thus quality management of
externally purchased business services from the perspective of a buying company have
received little attention so far by academics (Hemsworth, Sánchez-Rodríguez, & Bid-
good, 2008; Hemsworth, Sánchez-Rodríguez, & Bidgood, 2005; Sánchez-Rodríguez &
Martínez-Lorente, 2004). Rather, the literature on service quality in most cases has
been written from a business-to-consumer (B2C) perspective (Bienstock, Mentzer, &
Bird, 1997; Fitzsimmons, Noh, & Thies, 1998; Hernon, 2002; Jackson et al., 1995;
Kong & Mayo, 1993; Niranjan & Metri, 2008; Patterson & Spreng, 1997; Woo & En-
new, 2005). The few existing studies on service quality in a business-to-business
(B2B) setting mostly set an objective to analyze the dimensions according to which
customers evaluate service quality for distinct types of services but not which practices
they use for this evaluation (see, for example, Bienstock et al., 1997; Fehl, 2006; Pat-
terson & Spreng, 1997).
In addition, the literature on quality management predominantly has been adopting the
viewpoint of a provider of goods or services, and tried to answer the question how they
can improve the quality of the products or services offered to their consumers (Flynn,
Schroeder, & Sakakibara, 1994; Rönnbäck & Witell, 2008). However research on the
question, how companies receiving goods or services manage the quality of them is
scarce (Fynes, 1999; Fynes & Voss, 2002; Molina-Azorín, Tarí, Claver-Cortés, &
López-Gamero, 2009; Stanley & Wisner, 2001). In general, the relative disregard of
quality management from a buyer‟s perspective is surprising as it is estimated that ap-
proximately 50% of quality problems result from defects in the materials purchased
(Crosby, 1984; Dowst, 1987). Thus, the quality of a company‟s output is highly de-
pendent on the quality of its input (Forker, Mendez, & Hershauer, 1997). Therefore,
this paper presents an approach for further research on the following basic questions:
How do buying companies manage the quality of externally sourced business services?
and
How is the usage of quality management practices for business services by buying
companies related to service quality and business performance?
82 Quality Management Practices for Business Services
from a Buyer‟s Perspective
In doing so, it is divided into five sections: The first part defines business services, the
scope of work and introduces a service classification proposed by Wynstra et al.
(2006) to handle the heterogeneity of business services. In the second section, it draws
upon relevant literature in two areas of research: service quality and quality manage-
ment. On basis of the service classification and the literature review, the authors for-
mulate the problem in the fourth part. The fifth section introduces some preliminary
propositions and a conceptual framework for the further examination of the design of
quality management practices and their impact on performance for different types of
business services. Finally, the authors introduce a potential methodology for the re-
search project.
This paper is part of a larger research project with the objective to contribute to the
development of theory in the area of quality management by examining its applicabil-
ity from a purchasing perspective focusing on externally sourced business services.
For purchasing practitioners the study wants to provide recommendations for the de-
sign and utilization of quality management practices in the previously mentioned con-
text. For service providers, the project may give insights into how their business cus-
tomers manage the quality of their services offered. Thus, it may offer them an oppor-
tunity to better adjust their services to their customers‟ needs.
A.2 Background
A.2.1 Services, business services and scope of work
Although the discussion about what services actually are had started already in the
1960s (Fisk, Brown, & Bitner, 1993) until today no agreement on a universal defini-
tion has been achieved (Seth, Deshmukh, & Vrat, 2006b). Authors agree, nonetheless
that services possess several characteristics which differentiate them from goods
(Schneider & White, 2004; Svensson, 2006). Among these are their heterogeneity, in-
tangibility and inseparability of production and consumption (Parasuraman, Zeithaml,
& Berry, 1985) as well as the fact that service production normally, but not necessarily
always, involves some interaction between customer and provider (Grönroos, 2007;
Meffert & Bruhn, 2000). These characteristics can all be considered continua on which
different service types vary (Jackson & Cooper, 1988; Schneider & White, 2004).
Business or B2B services in this context are understood as services which are deliv-
Quality Management Practices for Business Services from a Buyer‟s Perspective
83
ered by firms or organizations and bought by other firms or organizations (Axelsson &
Wynstra, 2002; van der Valk & Rozemeijer, 2009).
It is important to note that the characteristics of services have some implications on the
design of quality management for business services from a buying company‟s perspec-
tive which may differentiate it from quality management for goods (cf. Ellram et al.,
2007; Jackson et al., 1995; Rönnbäck & Witell, 2008; Schneider & White, 2004; van
der Valk & Rozemeijer, 2009):
Heterogeneity of services makes it difficult to design a quality management that
fits to all types of business services. In contrast, it may be necessary for a buying
company to decide which combinations of quality management practices are best
suited for a specific type of business service. Intangibility results in difficulties in
the evaluation and comparison of business services as a customer cannot see,
hear, feel, smell or taste them (Haller, 2002; Jackson & Cooper, 1988). As a re-
sult, business customers may put greater emphasis on personal (and thus subjec-
tive) information sources to substitute more objective measurements and/or in-
clude criteria to measure the results and outcomes of services into their quality
management (Schneider & Bowen, 1995).
The inseparability of production and consumption of services implies that the
services do not yet exist when the buying company purchases it. This stresses the
need for clarifying the content of the service as requested by the customer and
suggests that quality management of business services may already start before
the purchase contract is signed. Furthermore, it means that business services can-
not be stored. Consequently, a buying company may put particular emphasis on
the availability of business services.
As service production often involves interaction between service provider and
customer, this interaction is an essential ingredient to the service experience.
Therefore, buying organizations may include an assessment of the interaction
process into their quality management of business services. Furthermore, the var-
iability of (internal or external) customers of a buying company as input may re-
sult in different demands. Thus, it may be necessary for a buying company to ad-
just their quality management practices to the usage of the business service by
their customers in order to meet their expectations.
Due to the heterogeneity of business services it is vital to define which business ser-
vices are in scope of this paper and which ones are not. To achieve this, the business
84 Quality Management Practices for Business Services
from a Buyer‟s Perspective
services examined by two benchmarking studies on indirect spend management
(CAPS Research, 2003; BME, 2005) and a service classification proposed by the Or-
ganisation for Economic Co-operation and Development (OECD, 2000) were com-
pared with regard to their classification of business services. The business services
used by these three studies as well as those in scope of this paper are depicted in Table
A- 1 in the appendix.
A.2.2 Classification of business services
In order to handle the heterogeneity of the business services in scope, the research pro-
ject will use a classification. The services management and marketing literature offers
various examples of service classifications for consumer services (see, for example,
Grönroos, 2007; Lovelock, 1983; Schneider & White, 2004). However, Boyt & Har-
vey (1997) and Smeltzer & Ogden (2002) emphasize that less attention has been given
to the classification of business services. Furthermore, most of the systematizations of
business services hinge on the characteristics of the provider rather than on the ones of
the buyer (van der Valk & Rozemeijer, 2009). These classifications may not be suffi-
cient in the attempt to understand how professional procurement manages the quality
of purchased business services. Jackson et al. (1995) suggest that usage of a business
service affects the classification. Wynstra et al. (2006) share this view and conclude
that the application of a business service by a buying organization affects the buyer-
supplier interaction patterns. They suggest a classification consisting of four different
types of services (Wynstra et al., 2006; van der Valk, Wynstra, & Axelsson, 2009):
Component services become a rather unaltered part of the offer to the end cus-
tomer
Semi-manufactured services are offered to the end customer as well but only af-
ter being changed by the buying company
Instrumental services are used as tools or instruments by the buying company in
order to produce their own product or service
Consumption services are completely used within the buying organization and
not part of the final offer to the end customer
This classification scheme is used for the research project as it is rather independent
from the characteristics of the service and may thus allow industry specific answers
regarding quality management. Furthermore, this classification will still allow compa-
Quality Management Practices for Business Services from a Buyer‟s Perspective
85
nies to provide information even if they have not implemented quality management
practices for the full range of their externally sourced business services as is suggested
by the focus on purchasing of goods of many companies (BME, 2007).
A.3 Literature review
The following chapter will present two areas of literature which promise to have the
potential of providing further insights into the question how buying companies manage
the quality of externally sourced business services: a) service quality which is part of
the wider domain of service marketing and b) quality management which constitutes a
section of operations management. These streams of literature are presented and short-
ly discussed regarding their contribution to the aforementioned questions.
A.3.1 Relevant literature on service quality
Within the field of service quality, research on service quality models and dimensions
predominantly debates what, i.e. which dimensions, are evaluated when quality of a
service is assessed by customers (Lehtinen & Lehtinen, 1991). Two schools have
emerged from this literature (Brady & Cronin, Jr., 2001; Woo & Ennew, 2005):
a) the “Nordic” school which is based upon ideas of Grönroos (1984; 2007) who
suggested that a technical (i.e. the “what”) and a functional (i.e. the “how”)
dimension determine what customers perceive as service quality;
b) the “American” school with its widely used model of service quality proposed
by Parasuraman et al. (1985; 1988; 1991) which uses dimensions that concep-
tualize service quality in terms of characteristics as to how the service is deliv-
ered (i.e., reliability, responsiveness, empathy, assurances, and tangibles)
(Shonk, 2006).
The Nordic school as well as the early conceptualizations of the American school are
both based on the disconfirmation paradigm which posits that perceived quality is a
result of a comparison between customer service expectations and perceived service
performance (Brady & Cronin, Jr., 2001; Churchill & Surprenant, 1982; Oliver, 1980;
86 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Oliver, 1981; Rust & Oliver, 1994b).1 In Table A- 2 in the appendix, major models of
both camps are shortly described in terms of the quality dimensions used. The aim is to
illustrate which dimensions of service quality should be covered by a buying compa-
ny‟s quality management practices. Although this review of service quality models
does not pretend to be a comprehensive scrutiny, we argue that – in spite of some con-
ceptual differences – the dimensions used in the various models represent the potential
service quality dimensions of business services. Moreover, we propose that they can
be assigned to three overall categories of service quality dimensions (see also Chella-
durai & Chang, 2000; Shonk, 2006): Physical appearance (appearance of facilities,
uniforms, documents etc. of the service provider), interaction (process of service de-
livery, interpersonal relations etc. between service provider and customer) and out-
come quality (the result of the service). Table A- 2 in the appendix assigns the service
quality dimensions of the models to these three categories to visualize this notion.
As noted before, comparably little research exists, which examines the service quality
dimensions of business services. Some of the available studies are depicted in Table
A- 3 in the appendix. The heterogeneity of the dimensions identified for B2B services
led some authors to suggest that they have to be defined for each B2B service individ-
ually (see, for example, Bienstock et al., 1997; Durvasula, Lysonski, & Mehta, 1999;
Van Dyke, Kappelman, & Prybutok, 1997). This may be true and will be an interesting
question to answer by the future research method proposed later in this paper. For the
purposes of this paper, however, we also regard the dimensions depicted in Table A- 2
as belonging to the physical appearance, interaction, and outcome quality since this
granularity may be sufficient for our study. The results of Lehtinen and Lehtinen‟s
(1991) empirical findings suggest that customers use these dimensions for their service
quality assessment but assign them different weights.
Although the studies described above provide valuable insights into the dimensionality
of service quality in a B2B environment, they do not examine which quality manage-
ment practices buying companies use for managing the quality of their purchased
business services.
Nevertheless, for quality management practices for business services from a buyer‟s
perspective the literature on service quality models and dimensions elucidated above
has several ramifications. First, the practices used should be able to establish the eval-
1 It has to be noted, however, that the disconfirmation paradigm has been subject to debate as, for example, it
may be difficult for customers to clearly define expectations and for providers to interpret these expectations (cf. Laesser, 2008; Tian-Cole & Cromption, 2003; Schneider & White, 2004).
Quality Management Practices for Business Services from a Buyer‟s Perspective
87
uation of quality along the axes of physical appearance, interaction and outcome quali-
ty. Second, they should be flexible enough to define the dimensions within these axes
according to the business service in focus and to assign different weights to different
dimensions in alignment with the subjective estimation of significance of a single di-
mension by the buying company. It follows that quality management practices cannot
be used for all business services in the same way. Rather their design is subject to the
quality dimensions and must be adjustable to them. Thus, the service quality dimen-
sions may represent an important determinant of the usage of quality management
practices for business services by buying companies.
A.3.2 Relevant literature on quality management
Two streams within the research on quality management may provide insights for the
questions asked in this paper and are presented and discussed shortly below: a) litera-
ture on quality management practices, and b) literature on the relationship between
quality management practices and firm performance.
Regarding research on quality management (2002; Sousa & Voss recommend that it
should deal with the level of practices – in contrast to more general principles and too
detailed techniques – since „principles are too general for empirical research and tech-
niques are too detailed to obtain reliable results‟ (Sousa & Voss, 2002: 92). This paper
concedes their view.
Saraph, Benson, & Schroeder (1989) were the first who identified a core set of eight
quality management practices. Later, Flynn et al. (1994) categorized quality manage-
ment practices into seven dimensions: top management support, quality information,
process management, product (or service) design, workforce management, supplier
involvement and customer involvement. According to Fynes (1999), these practices
mirror the dimensions used in quality award schemes such as the Baldrige and the Eu-
ropean Foundation for Quality Management (EFQM) Award and are therefore the
ones most commonly examined (see also Molina-Azorín et al., 2009; Zu, 2009). Thus,
they will form the constructs, along which quality management for business services
by buying companies is to be examined. Their definitions and examples for potential
techniques are shortly illustrated in Table A- 4 in the appendix.
Another important area of research with regard to quality management practices is the
examination to which extent they have an impact on firm performance (Sousa & Voss,
2002). Advocates of quality management propose quality management practices can
88 Quality Management Practices for Business Services
from a Buyer‟s Perspective
have a positive impact on a manufacturer‟s firm profitability either by the manufactur-
ing or the market route (Deming, 1982; Garvin, 1984; Garvin, 1988; Molina-Azorín et
al., 2009; Sousa & Voss, 2002; White, 1996).
In the market route, improvements of the product or service quality lead to higher rep-
utation for quality. This may result in more sales and thus larger market share or alter-
natively, to less elastic demand and higher prices. Increased market share, however,
results in higher economies of scales which lowers costs. Decreased cost result in
higher profits. In the manufacturing route, enhanced product or service quality leads to
increased productivity and fewer defects, less rework, scrap cost, or lower warranty
and product liability costs. Increased productivity and lower rework and scrap cost
result in lower manufacturing and service cost whereas lower warranty and product
liability cost causes a decrease of service costs. Lower manufacturing and service cost
raise profits. In both cases profits can be achieved if the costs of the quality manage-
ment practices are outweighed by the higher gains.
Ample amount of research has been conducted on the relationship between quality
management practices and operational, as well as (financial) business performance.
Sometimes these studies provide mixed results (Nair, 2006; Rönnbäck & Witell,
2008). However, most authors now agree that the use of quality management practices
has a positive, significant and strong effect on operational performance (Dow, Samson,
& Ford, 1999; Maani, Putterill, & Sluti, 1994; Sluti, Maani, & Putterill, 1995; Sousa &
Voss, 2002; White, 1996). The impact of quality management practices on financial
business performance is seen as positive and significant, but in some cases less strong
than on operational performance (Capon, Farley, & Hoenig, 1990; Hendricks &
Singhal, 1997; Nilsson, Johnson, & Gustafsson, 2001; Powell, 1995; Rönnbäck &
Witell, 2008).
The aforementioned passages provide the potential rationale for the adoption of quality
management practices for business services by a buying company. First, quality man-
agement practices may have positive effects on the quality of component and semi-
manufactured services. Increasing quality of these services may result in higher cus-
tomer satisfaction and ultimately in higher sales revenues. Second, quality manage-
ment practices may positively impact the quality of instrumental or consumption ser-
vices and thus raise internal operational performance. In addition to potentially higher
employee satisfaction, this may also result in increased productivity, process efficiency
and thus decreased cost.
Quality Management Practices for Business Services from a Buyer‟s Perspective
89
Some studies compared the utilization of quality management practices in different
industries. The mostly discovered that differences between service and manufacturing
companies regarding the adoption of quality management practices exist (Benson, Sar-
aph, & Schroeder, 1991; Powell, 1995; Rönnbäck & Witell, 2008; Singh, Feng, &
Smith, 2006) and that the level of quality management practice is not as high in service
as in manufacturing companies (Benson et al., 1991; Quazi, Jemangin, Kit, & Kian,
1998; Woon, 2000). These findings underline the impact of the industry on the design
of quality management. Therefore, the type of industry may be a major determinant of
the use of quality management practices for business services by buying companies.
The studies cited above all adopted the perspective of a goods or service provider. On-
ly recently, researchers examined the use of quality management practices from a buy-
ing company‟s viewpoint (Sánchez-Rodríguez & Martínez-Lorente, 2004; Hemsworth
et al., 2005; Hemsworth et al., 2008). Sánchez-Rodríguez & Martínez-Lorente (2004)
investigated the usage of a subset of quality management practices in purchasing de-
partments of Spanish manufacturing companies and their relationship to perceived
purchasing and business performance as well as internal customer satisfaction. They
concluded that the quality management practices studied were positively and signifi-
cantly related to perceived purchasing performance and internal customer satisfaction
but only the practices “commitment of purchasing management”, “coordination with
other functional areas” and “employee management” were positively correlated to per-
ceived overall business performance (Sánchez-Rodríguez & Martínez-Lorente, 2004).
Later, Hemsworth et al. (2008) confirmed these findings using the same sample and
data set (Hemsworth et al., 2008; Hemsworth et al., 2005). Furthermore, they discov-
ered that quality management practices in purchasing have a positive impact on pur-
chasing performance mediated through the effect of information systems.
These authors provide valuable first insights into the utilization of quality management
practices in purchasing. However, they do not include the quality of incoming business
services into their work and their sample does not entail service companies. Further-
more, they rely completely on subjective perceptions of purchasing managers in the
evaluation of purchasing and business performance. This approach ignores the peculiar
characteristics of services and their potential impact on the usage of quality manage-
ment practices as well as the differences in the adoption of quality management prac-
tices between manufacturing and service companies examined by previous studies. In
addition, the individual perceptions of just one group of respondents may have led to
90 Quality Management Practices for Business Services
from a Buyer‟s Perspective
„socially desirable‟ (Fontana & Frey, 2005: 702) answers. These gaps underscore the
need for the proposed research project.
A.4 Problem formulation
Following the literature review above, we conclude that a number of gaps remain re-
garding how buying companies manage the quality of business services. Researchers
in the field of service quality pointed out that studies on service quality were predomi-
nantly conducted in a B2C rather than a B2B context. They attempted to answer the
question, according to which dimensions consumers evaluate service quality of service
providers. The studies which exist in a B2B setting, however, focus on a single service
rather than a comprehensive set of business services often bought by buying compa-
nies. Therefore, the literature on service quality does not answer the question how buy-
ing companies manage the service quality of their externally sourced business services.
The quality management literature predominantly takes the perspective of a goods or
service provider. It aims at answering questions regarding which quality management
principles are used by manufacturing or service companies in order to improve the
quality of their offerings. Furthermore, they answer the question how the utilization of
these relates to operational or financial business performance. So far, little attention
has been given, however, to the question whether the practices of quality management
are also used by customers (i.e. buying companies) to manage the quality of externally
sourced business services.
Hence, the objective of this paper is to identify – while using Wynstra et al.‟s (2006)
classification of business services – patterns in the usage of quality management prac-
tices of buying companies. Thus, it wants to make a contribution to the academic liter-
ature by discovering how quality management practices are implemented by buying
companies for their externally sourced business services.
A.5 Initial propositions and preliminary research framework
As elucidated before, the dimensions according to which a service customer evaluates
service quality as well as the weights assigned to them may vary (see section on ser-
vice quality). Thus, we argue that the service quality dimensions may influence the
design and adoption of quality management practices for business services by buying
companies. This means that the intensity of practice utilization may alternate regarding
Quality Management Practices for Business Services from a Buyer‟s Perspective
91
to the quality dimensions to better evaluate the required service quality. This consider-
ation leads us to our first proposition:
PP 1: The service quality dimensions are one major determinant of the design and
adoption of quality management practices for business services by buying
companies.
For example, a buying company may regard the “outcome” dimension of a technical
maintenance and repairs service more crucial than the physical context or interaction
quality. For professional services, by contrast, “physical context” and “interaction”
quality may play a far more important role for the buying company. This varying em-
phasis of certain dimensions for certain business services may impact the quality man-
agement practices used as some quality management practices may better represent
particular dimensions than others.
As shown before, Wynstra et al. (2006) argue that the usage of a business service by
the buying company influences the buyer-seller interaction. It may also be true that the
usage of an externally sourced business service by the buying company influences the
design and adoption of its quality management practices. Therefore, we propose:
PP 2: The usage of a business service by the buying company is one major determi-
nant of the design and adoption of quality management practices for business
services by buying companies.
This means that a buying company may either use different quality management prac-
tices for component, semi-manufactured, instrumental or consumption business ser-
vices or that the intensity of their adoption may vary. For example, a real estate agent
lending managed apartments to its customers and therefore purchasing facility services
and passing them unaltered through to its customers may use either more practices to
manage their quality or more intensively. By contrast, a real estate agent purchasing
facility services only for maintaining its own offices may use quality management
practices only sporadically, for example, by checking cleanliness irregularly.
Some research has shown that the utilization of quality management practices of goods
or service providers varies according to industry (see, for example, Rönnbäck &
Witell, 2008; Singh et al., 2006; Woon, 2000). This may also be the case for quality
management practices for business services. Therefore, we bring forward the follow-
ing proposition:
92 Quality Management Practices for Business Services
from a Buyer‟s Perspective
PP 3: The industry of which a buying company is part is one major determinant of
the design and adoption of quality management practices for business services
by buying companies.
This means that buying companies in some industries may just use more or more ad-
vanced quality management practices for business services than others. In line with
some previous studies among providers in manufacturing and service industries (see,
for example, Benson et al., 1991; Quazi et al., 1998; Singh et al., 2006; Woon, 2000),
we expect manufacturing companies to score higher in terms of number and sophisti-
cation of quality management practices applied for their business services.
The major goal of the implementation of quality management in companies is to im-
prove the quality of the goods or services bought or offered. The utilization of quality
management practices for externally sourced business services may result in an im-
proved level of quality of these services delivered by the providers. We therefore sug-
gest:
PP 4: The design and adoption of quality management practices for business ser-
vices by buying companies is positively related to the perceived service quality
of externally sourced business services.
Such a relationship may result from various effects of quality management. For exam-
ple, the utilization of quality information may provide the responsible purchaser with
the required data to better evaluate a provider‟s long-term service quality. This may
allow him to add efficient quality incentives complementing existing price stipulations
into contractual agreements.
Ample amount of research indicates that quality management is positively related to
business performance (see, for example, Molina-Azorín et al., 2009; Nair, 2006; Sousa
& Voss, 2002). These studies show that quality management can have positive effects
on either sales revenues (i.e., the market route) or cost (i.e., the manufacturing route)
(cf. Deming, 1982; Garvin, 1984; Garvin, 1988; Molina-Azorín et al., 2009; Sousa &
Voss, 2002; White, 1996). Consequently, we presume that such a positive relationship
also exists between service quality enhanced by quality management practices for
business services and business performance. However, the strength of this relationship
may vary according to the application of the business service by the buying company.
These considerations yield our next proposition:
Quality Management Practices for Business Services from a Buyer‟s Perspective
93
PP 5: There is a perceived positive relationship between service quality of externally
sourced business services and sales revenues and/or cost mediated by the us-
age of the business service by the buying company.
For example, ameliorated service quality of component and semi-manufactured busi-
ness services may have a stronger positive effect on sales revenues than on cost as they
are passed-through to the final consumer. Improved service quality of instrumental and
consumption services, by contrast, may positively influence (internal) cost more than
sales revenues by raising internal efficiency as these are partially or completely con-
sumed by the buying company.
Some authors emphasize that quality management can only have positive effects on a
firm‟s profitability if the cost of implementing and maintaining quality management is
outweighed by its performance contributions (Crosby, 1984; Deming, 1982; Garvin,
1984; Garvin, 1988). Hence, a buying company may only utilize quality management
practices for externally sourced business services if the benefits exceed the cost. We
would like to reflect this implication by the following proposition:
PP 6: The sales revenues raised or cost decreased by improved service quality of
externally sourced business services outweigh the cost for implementation and
maintenance of the quality management practices used and thus increase the
company‟s profits.
These initial propositions outline the preliminary research framework depicted in Fig-
ure A- 1. We are aware that these propositions need further development. Potential
variations within the four groups of business services should be better defined as the
intensity of the usage of quality management practices may vary within the two groups
of business services.
94 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Figure A- 1: Preliminary conceptual model
A.6 Methodology
The research project can be divided into a first phase which aims to develop theory
from case studies and a second during which hypotheses will be tested by using a
quantitative approach. It thus follows the methodological recommendations given by
Meredith (1993).
During the first phase, the initial propositions will be further developed into hypothe-
ses by means of additional literature research and exploratory, multiple, embedded
case studies (Yin, 2003). Semi-structured interviews (Rubin & Rubin, 1995) and doc-
ument research (Stake, 1995) will be used in the case studies.
We propose to study one to two services in each of the four categories according to
Wynstra et al.‟s classification of business services (Wynstra et al., 2006). The number
of cases should lie between four and ten. This number is in line with Eisenhardt‟s rec-
ommendations regarding the sample size for case studies (Eisenhardt, 1989). The
number of business services under examination will therefore vary between a mini-
mum of 16 to a maximum of 80. During an introductory meeting the services to be
studied and the employees to be interviewed will be defined. The target group of re-
spondents is based in purchasing, quality management and/or other departments re-
sponsible for the quality of specific externally business services.
In line with an approach chosen by van der Valk (2007) to examine buyer-seller inter-
action patterns during service exchange, we also aim to study buying companies from
a wide range of industries. This may allow for some degree of external validity. The
buying companies will be selected according to the type of industry (services vs. man-
ufacturing companies) and the type of their customers (B2B vs. B2C). We choose the
first criterion because we expect differences in the adoption of quality management
Quality Management Practices for Business Services from a Buyer‟s Perspective
95
practices related to the type of industry the buying company operates in. Regarding the
second criterion we also follow van der Valk‟s (2007) argument that in B2B settings,
customers of the buying company may be more involved in the specification and defi-
nition of requirements of the service than in more anonymous B2C markets. We there-
fore propose to select at least one B2B, and B2C service company as well as one B2B,
and B2C manufacturing company. Public institutions or governmental companies are
not included as purchasing processes for them are rather specific and subject to partic-
ular legislation which may not be applicable to other companies (cf. Schiele & McCue,
2006).
The second research phase comprises testing the propositions derived from the case
studies by means of a quantitative method which is still to be defined. This phase is
supposed to achieve some degree of statistical generalizability. This phase will strive
to develop a structural equation model following a two-step approach consisting of the
development of a measurement model and then testing the structural model (cf. Hair,
Jr., Black, Babin, Anderson, & Tatham, 2006; Homburg & Giering, 1996).
A.7 Conclusion
Business services represent a significant portion of a buying company‟s expenditures.
However, research on purchasing of business services in general and on quality man-
agement for business services in particular is relatively scarce. The research project
proposed in this paper wants to shed more light on the question how buying companies
use quality management practices for managing the quality of their externally sourced
business services.
In doing so, it analyzes literature on service quality and quality management. Based on
the literature review it formulates the problem and develops initial propositions regard-
ing the determinants of the design and adoption of quality management practices for
business services by buying companies as well as their impact on service quality and
business performance. Afterwards, the paper suggests a preliminary conceptual
framework. Finally, it presents a research methodology entailing case studies for the
further elaboration of propositions and some constructs and a subsequent quantitative
analysis.
The research project wants to contribute to the development of theory in the area of
quality management by taking a purchasing perspective and adding externally sourced
business services into the existing knowledge base. This may also support purchasing
96 Quality Management Practices for Business Services
from a Buyer‟s Perspective
managers in their attempts to design efficient quality management practices in this
context. Service providers may benefit from better understanding how their profes-
sional customers evaluate their services offered.
Quality Management Practices for Business Services from a Buyer‟s Perspective
97
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Appendices of paper A
Table A- 1: Overview of business services in scope
Study: OECD (2000) CAPS (2003) BME (2005) Business services in scope of
paper
Examples of business services in
scope of paper
Bu
sin
ess
serv
ices
in s
co
pe
(alp
hab
eti
call
y s
ort
ed
)
Accomodation and food services
Computer hardware Construction Computer implementation and maintenance services
Hardware and software implementation, customization, maintenance on single
user level, telecommunication services Administrative and support, and waste management
Consulting Consulting Facility services Cleaning, catering, security, real estate maintenance
Arts, entertainment and recreation
Employee benefits Facility management Financial services Banking, finance, insurance
Education Engineering and manufac-turing equipment
Financial services Professional services Management consultancy, software development and implementation on company or unit level, accounting and auditing, legal, architects
Finance and insurance Facilities maintenance Fleet management Research and development service
Development, engineering
Health care and social assis-tance
Fleet (executive, non-executive)
Human resource servi-ces
Technical maintenance and repairs
Maintenance and repair of production equipment
Information Industrial supply IT services Transportation and distribu-tion services
Warehousing, value-added logistics, transport
Management of companies and enterprises
Insurance Logistics services Fleet management Provision of vehicles for transportation of staff or goods
Other Logistics freight Marketing services Human resource services Training, recruitment Professional, scientific and
technical
Marketing Industrial maintenance Marketing services Campaign development, production,
print services Public administration Printing Patent and legal services Travel management Organisation and booking of business
travels
Real estate, rental and leas-ing
Software Purchasing services
Transportation and ware-housing
Total Travel Research and develop-ment
Wholesale and retail trade Travel management
Quality Management Practices for Business Services from a Buyer‟s Perspective
106
Table A- 2: Description of service quality dimensions in B2C contexts and their assignment to physical context, interaction, and outcome quality
Model Dimension Short description Assignment to conceptual
dimension
Grönroos (1984) Functional quality Outcome, i.e. what a customer actually receives Interaction quality Technical quality Perceived interaction, i.e. how the customer obtains the service Outcome quality
Parasuraman et al. (1988)
Assurance Knowledge and courtesy of employees and their ability to inspire trust and confi-dence
Interaction quality
Empathy The caring, individualized attention the service provider offers its customers Interaction quality
Reliability The ability of a service provider to perform the promised service dependably and accurately
Interaction quality
Responsiveness The willingness of the service provider to help customers and provide prompt service
Interaction quality
Tangibles Physical facilities, equipment, and appearance of service providers‟ personnel Physical context quality Lehtinen & Lehtinen (1991) – first model
Corporate quality Customers‟ view of the provider‟s reputation and image Interaction quality
Interactive quality Interaction processes between customer and service provider and/or their equip-ment
Interaction quality
Physical quality Materials and facilities of a service provider Physical context quality
Lehtinen & Lehtinen (1991) – second model
Output quality Customers‟ evaluation concerning the result of a service production Outcome quality
Process quality Customers‟ perception of the service production process and his/her participation Interaction quality Rust & Oliver (1994a) Service environment Internal environment of the service provider in regard to its organizational culture
and philosophy towards service provision (e.g. organizational culture and philoso-
phy) and external environment, i.e. physical appearance of the service provider‟s location
Physical context quality
Service delivery Perceived quality of the interaction process between customer and service provider Interaction quality
Service product Design of the service including the specifications and service targets to offer Outcome quality Dabholkar, Thorpe, &
Rentz (1996)
Personal interaction Way the customer perceives being treated by the retail store staff Interaction quality
Physical aspects Appearance and the layout of the retail store Physical context quality
Reliability Ability of a service provider to perform the promised service accurately Interaction quality Brady & Cronin, Jr. (2001)
Interaction quality Customers‟ interpersonal actions that ensue during service delivery Interaction quality
Outcome quality Customers‟ perceptions as what he is left with when the service has been rendered Outcome quality Physical environment
quality
Surrounding environment or physical facilities of a service provider Physical context quality
Quality Management Practices for Business Services from a Buyer‟s Perspective
107
Table A- 3: Summary of publications examining the dimensions of service quality in a B2B environment
Publication Type of study Sample size and
respondents
Service examined Model used Findings regarding service quality dimen-
sions
Brensinger & Lam-bert (1990)
Empirical 170 purchasers Less-than-truckload (LTL) motor carrier service
SERVQUAL The predictive quality of SERVQUAL in this context was low.
Harte & Dale (1995) Conceptual n/a Professional services SERVQUAL and literature research
Tangibles, empathy, assurance, reliability, timeliness are requested most by clients of
professional services. Bienstock et al. (1997)
Empirical 462 purchasers Physical distribution service Revised SERV-QUAL
Timeliness, availability, condition have most significant impact on service quality perception
of professional buyers. Patterson & Spreng (1997)
Empirical 128 users of consul-tancy services
Professional business services Dimensions based on Grönroos (1984)
The technical/outcome factor was more signif-icant than the five process dimensions (methodology, service, relationships, global
and problem identification). Durvasula et al. (1999)
Empirical 114 shipping manag-ers
Ocean freight services SERVQUAL Tangibles, reliability and a third factor combin-ing responsiveness, assurance, and empathy
best fit for measuring service quality. Gounaris (2005) Empirical 515 senior managers
from service custom-ers
Training and recruiting con-sultancies, corporate banking, software development and
maintenance, freight ship-ping.
SERVQUAL vs. alternative model INDSERV
INDSERV comprising the dimensions poten-tial quality, hard quality, soft quality, and out-come quality outperforms SERVQUAL.
Woo & Ennew
(2005)
Empirical 185 senior govern-
ment engineers and professional archi-tects
Consulting engineering ser-
vices
International/ Indus-
trial Marketing and Purchasing Group (IMP) interaction model (Håkansson, 1982; Ford, 1997)
The quality criteria social exchange and coop-
eration are relatively more important than financial exchange, product/service exchange, information exchange, and adaptation in cus-tomer‟s evaluation of quality for professional services.
Seth, Deshmukh, & Vrat (2006a)
Empirical 117 professionals Transport services Revised SERV-QUAL
Service reliability, credibility, service compe-tence, intra-organisational communication, service flexibility, financial trust and pleasant environment have most significant impact on service quality perception of professional buy-
ers.
Quality Management Practices for Business Services from a Buyer‟s Perspective
108
Table A- 4: Quality Management Practices
Quality management
practice
Description Potential techniques Selected literature
Management support Actions and behaviors of senior management which show commitment to quality
Setting clear quality objec-tives, encouragement of em-ployee involvement into ac-tivities for quality improve-ment
Ahire, Landeros, & Golhar (1995); Dean, Jr. & Bowen (1995); Flynn et al. (1994); Fynes (1999); Hemsworth et al. (2008); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Zu (2009)
Quality information Adequate, accurate, and time-ly visibility of defect rates, compliance to specifications, adherence to schedules etc.
Histograms, Pareto charts, cause-and-effect diagrams, check sheets, scatter dia-grams, flowcharts, and control charts
Ahire et al. (1995); Dean, Jr. & Bowen (1995); Evans & Lindsay (2002); Flynn et al. (1994); Fynes (1999); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Zu (2009)
Process management Cross-departmental process analysis and improvement
Process and role definitions, cleanliness and efficient or-ganization of the workplace,
statistical process control
Ahire et al. (1995); Dean, Jr. & Bowen (1995); Flynn et al. (1994); Molina-Azorín et al. (2009); Powell (1995); Saraph et al. (1989); Zu (2009)
Product and/or service design
Reviews of products and services before production and the design of products or
services with respect to quali-ty
Cross-functional project teams, design reviews, value analysis, and the systematic
identification of customer requirements
Ahire et al. (1995); Flynn et al. (1994); Fynes (1999); Saraph et al. (1989); Zu (2009)
Workforce management Recognition of employee
performance on quality and encouragement team dynam-ics
Quality circles, careful re-
cruitment approaches, team-work, reward systems, and commitment to training
Ahire et al. (1995); Dean, Jr. & Bowen (1995); Flynn et al. (1994); Fynes
(1999); Hemsworth et al. (2008); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Tawfik Madi (2009); Zu (2009)
Supplier involvement Establishment of long-term
relationships with suppliers and enhancement of suppli-ers‟ capabilities of meeting the purchasing company‟s requirements
Joint product development,
emphasis on quality as a crite-rion in supplier selection and the application of vendor assessment or certification procedures
Ahire et al. (1995); Flynn et al. (1994); Fynes (1999); Hemsworth et al.
(2008); Molina-Azorín et al. (2009); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Zu (2009)
Customer involvement Effective measurement and monitoring of customers‟ needs, expectations and/or satisfaction
Field visits, customer feed-back mechanisms, round-tables with customers regard-ing quality
Ahire et al. (1995); Dean, Jr. & Bowen (1995); Flynn et al. (1994); Fynes (1999); Molina-Azorín et al. (2009); Powell (1995); Zu (2009)
Quality Management Practices for Business Services from a Buyer‟s Perspective
109
B Exploring quality management for business services
from a buyer’s perspective using multiple case study ev-
idence
Publication information
The second paper was published in the International Journal of Operations and Produc-
tion Management as:
Holschbach, E., & Hofmann, E. 2011. Exploring quality management for business ser-
vices from a buyer‟s perspective using multiple case study evidence. International
Journal of Operations and Production Management, Vol. 31, Iss. 6, pp. 648-685.
Abstract
Purpose: This paper investigates how buying companies manage the quality for their
externally sourced business services. It explores how quality management for business
services influences the performance of the buying company and what the major deter-
minants of quality management are. The paper presents case evidence on which a con-
ceptual model with preliminary propositions is built upon.
Design/methodology/approach: The paper uses case study evidence from eight man-
ufacturing and eight service companies. Drawing on the findings of these case studies,
a conceptual model with propositions is presented.
Findings: The paper suggests that buying companies do not yet use quality manage-
ment for externally sourced business services to its full potential. However, buying
companies using quality management practices for business services report positive
effects on service quality and satisfaction of internal or external customers. The major
determinants affecting the intensity of quality management are the usage of the service
by the buying company, the risk associated with quality failures, the degree of stand-
ardization, and volume of the purchased service.
Research limitations/implications: The research is based on information from 16
companies located in Germany and the conducted study is exploratory in nature. The
collection of statistical data will be subject to future research as suggested in this pa-
per.
110 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Practical implications: The insights obtained from this paper can assist purchasers in
their decision on how to design quality management practices. By understanding what
determines the quality management practices of buying companies, service providers
may better adjust their service offerings to customers‟ requirements.
Originality/value: Quality management for business services in professional pro-
curement has not attracted much academic attention so far, as literature on quality
management mainly adopted the perspective of a goods or service provider. Literature
on purchasing of services concentrated on differences between purchasing of goods
and services and literature on service quality focused on consumer services. This paper
fills this gap conceptually with a multiple case study and offers guidance for further
research.
Keywords: Quality management, Purchasing, Services, Supplier management
B.1 Introduction
The importance of services for economies and companies is significant and still in-
creasing (Axelsson & Wynstra, 2002; Jackson, Neidell, & Lunsford, 1995; OECD,
2000; Schneider & White, 2004). For example, the share of services of the gross value
added in Germany increased from 48.4% in 1970 to 68.9% in 2007 (Statistisches Bun-
desamt, 2009: 10). Some authors estimate that externally purchased services on a
weighted average account for more than half of a company‟s total spend (Fearon &
Bales, 1995). More recent studies suggest that the ratio of business services to total
purchasing volume lies between 15 and 28% for manufacturing companies (BME,
2005a: 5; Centre for Management Development, 2005). The share of these business-
to-business services may increase in the future due to a continuous trend towards out-
sourcing and concentration on core competencies (Cox, Chicksand, Ireland, & Davies,
2005; Ellram, Tate, & Billington, 2007; Fuller, 1998; Miettinen, Ventovuori, & Hyt-
tinen, 2005; Murray & Kotabe, 1999; van der Valk & Rozemeijer, 2009).
Despite the significance of business services for purchasing, most buying departments
have focused on the optimization of the supply of goods during the last years (Axels-
son & Wynstra, 2002; Ellram et al., 2007; van der Valk, 2008; van der Valk, 2007).
Similarly, the academic literature on purchasing has predominantly concentrated on
the supply of goods (Bals, Hartmann, & Ritter, 2009; Cox et al., 2005; Ellram et al.,
2007; Smeltzer & Ogden, 2002; van der Valk & Rozemeijer, 2009; van der Valk,
2008; Wynstra, Axelsson, & van der Valk, 2006). In particular, quality management of
Quality Management Practices for Business Services from a Buyer‟s Perspective
111
externally purchased business services from the perspective of a buying company has
received little attention so far by academics (Hemsworth, Sánchez-Rodríguez, & Bid-
good, 2008; Hemsworth, Sánchez-Rodríguez, & Bidgood, 2005; Sánchez-Rodríguez &
Martínez-Lorente, 2004). Accordingly, the literature on quality management predomi-
nantly has adopted the viewpoint of a provider of goods or services, and tried to an-
swer the question how sellers can improve the quality of the products or services of-
fered to their consumers (Flynn, Schroeder, & Sakakibara, 1994; Rönnbäck & Witell,
2008). However research on the question, how companies receiving goods or services
manage the quality of them is scarce (Fynes, 1999; Fynes & Voss, 2002; Molina-
Azorín, Tarí, Claver-Cortés, & López-Gamero, 2009; Stanley & Wisner, 2001). The
relative disregard of quality management from a buyer‟s perspective is surprising as it
is estimated that approximately 50% of quality problems result from defects in the ma-
terials purchased (Crosby, 1984; Dowst, 1987). Thus, the quality of a company‟s out-
put is highly dependent on the quality of its input (Forker, Mendez, & Hershauer,
1997).
So far, only little research has examined the quality management practices used by
purchasing departments. Sánchez-Rodríguez & Martínez-Lorente (2004) recently pre-
sented a study in the International Journal of Operations and Production Management
(Sánchez-Rodríguez & Martínez-Lorente, 2004). Later Hemsworth et al. (2005) and
Hemsworth et al. (2008) verified their results using the same data set. However, these
contributions regard manufacturing companies receiving goods as unit of analysis and
are limited to perceptions of purchasers and certain quality management practices only
(Hemsworth et al., 2008; Hemsworth et al., 2005; Sánchez-Rodríguez & Martínez-
Lorente, 2004). They may thus neglect the particular characteristics of services as well
as type of industry and their impact on the adoption of quality management practices
by buying companies. Therefore, the paper at hand wants to expand and extend the
knowledge developed in these previous works.
Due to the comparably high degree of novelty and the exploratory character of the top-
ic, this paper presents multiple case study evidence to answer the following research
questions (RQ):
RQ 1: How do buying companies use quality management practices to manage the
quality of externally sourced business services?
RQ 2: How is the usage of quality management practices for business services by
buying companies related to service quality and firm performance?
112 Quality Management Practices for Business Services
from a Buyer‟s Perspective
and
RQ 3: What are the major determinants of the design of quality management practic-
es for business services by buying companies?
The methodology applied to answer the research questions is congruent with the con-
ceptual research approach developed by Meredith (1993). In such a pre-empirical
stage, the topic is studied exploratively. Therefore, we use the literature on quality
management and purchasing of services as well as evidence from multiple case studies
to formulate a conceptual model (Marshall & Rossman, 2006) which is then trans-
ferred into propositions (Dul & Hak, 2008). This process contributes to the develop-
ment or refinement of theory (Eisenhardt, 1989).
The paper is divided into six sections: After these introductory remarks, the second
section reviews the literature resulting in a preliminary research model as basis of data
collection during the case studies. The third section explains the methodology used
followed by the fourth section presenting the results from case studies. The fifth sec-
tion discusses and introduces the resulting conceptual model which can be used for
further research in this area. Finally, we summarize the results from a managerial and
theoretical perspective and propose future areas of further research in the sixth section.
B.2 Theoretical foundation
The following chapter will shortly investigate the literature on quality management
and purchasing of services. In particular, it presents and discusses their contribution
regarding potential practices for the management of externally sourced business ser-
vices, the performance effects of their usage as well as factors determining their de-
sign. After exploring the academic literature, a preliminary research model will then be
introduced as basis for data collection by multiple case studies.
B.2.1 Quality management practices
The literature on quality management and purchasing of services provide first insights
into how buying companies may manage quality of their externally sourced products.
Literature on quality management: Saraph, Benson, & Schroeder (1989) were one of
the first authors who identified a core set of eight quality management practices. Later,
Flynn et al. (1994) categorized quality management practices into seven dimensions:
quality information, supplier involvement, customer involvement, process manage-
Quality Management Practices for Business Services from a Buyer‟s Perspective
113
ment, workforce management, product (or service) design, and top management sup-
port. According to Fynes (1999), these practices mirror the dimensions used in quality
award schemes such as the Baldrige and the European Foundation for Quality Man-
agement (EFQM) Award and are therefore the ones most commonly examined (see
also Molina-Azorín et al., 2009; Zu, 2009). Thus, they will form the constructs, along
which quality management for business services by buying companies is to be exam-
ined. Their definitions and examples for potential techniques are shortly illustrated in
Table B- 1 in the appendix.
Literature on service purchasing: Some authors stress that certain aspects of the pur-
chasing process for business services are more important than or just different to the
purchase process for goods (Axelsson & Wynstra, 2002). Thus, existing purchasing
practices for goods may not be directly applicable to services (van der Valk & Ro-
zemeijer, 2009; Wittreich, 1966). Most authors agree that such differences between
purchasing of services and goods have their origin in the specific characteristics of
services (Jackson et al., 1995). The intangibility and heterogeneity of business services
exacerbates, for example, their examination by organisational purchasers before or
even after the purchase and thus resulting in a strong reliance on personal information
during these phases (Jackson et al., 1995; van der Valk & Rozemeijer, 2009). The in-
separability of production and consumption of services implies that the buying compa-
ny is both consumer and co-producer and cannot store services (Grönroos, 2007;
Ellram et al., 2007). This makes a clear specification of the service before the purchase
more crucial but also complex and highlights how closely connected the selection of a
service provider is to the post-purchase quality evaluation (Jackson et al., 1995; Lind-
berg & Nordin, 2008). Finally, services are delivered in interactions between human
representatives of the service provider and buying company and thus difficult to pro-
duce with consistent characteristics and quality (Jackson et al., 1995; van der Valk &
Rozemeijer, 2009). This again complicates to standardize, count and value them
(Lindberg & Nordin, 2008) and requires an assessment of the interaction process by
various stakeholders (Axelsson & Wynstra, 2002). Taken together the peculiarities of
services imply that they entail greater performance ambiguity (Bowen & Jones, 1986)
which a quality management for externally sourced business services should take ac-
count of.
114 Quality Management Practices for Business Services
from a Buyer‟s Perspective
B.2.2 Effects of quality management on performance
The literature on quality management and purchasing of services all in part deal with
the question what the effects of quality management on performance may be. In par-
ticular, authors in the area of quality management identified positive effects of quality
management practices on firm performance.
Literature on quality management: Ample amount of research has been conducted on
the relationship between quality management practices and operational, as well as (fi-
nancial) business performance. In these studies operational performance was measured
by constructs such as percentage of defects, cost of quality, product quality, on-time
delivery, productivity results whereas return-on-assets, return-on-equity, return-on-
investment, market share and stock prices were used for measuring financial business
performance (Molina-Azorín et al., 2009; Nair, 2006). Sometimes these studies pro-
vide mixed results (Nair, 2006; Rönnbäck & Witell, 2008). However, most authors
agree that the use of quality management practices has a positive, significant and
strong effect on operational performance (Dow, Samson, & Ford, 1999; Maani, Putt-
erill, & Sluti, 1994; Sluti, Maani, & Putterill, 1995; Sousa & Voss, 2002; White,
1996). The impact of quality management practices on financial business performance
is seen as positive and significant, but in some cases less strong than on operational
performance (Capon, Farley, & Hoenig, 1990; Hendricks & Singhal, 1997; Nilsson,
Johnson, & Gustafsson, 2001; Powell, 1995; Rönnbäck & Witell, 2008).
These findings are also corroborated by authors in the area of service marketing who
conclude that there is a causal relationship between service quality and customer satis-
faction and that service quality is an antecedent of customer satisfaction (Churchill &
Surprenant, 1982; Cronin, Jr. & Taylor, 1992; Cronin, Jr., Brady, & Hult, 2000;
Schneider & White, 2004; Storbacka, Strandvik, & Grönroos, 1994; Woodside, Frey,
& Daly, 1989). Moreover, many authors also posit that customer satisfaction is posi-
tively – although not always perfectly – related to customer‟s repurchase intentions
and thus to a firm‟s sales volume (Cronin, Jr. et al., 2000; Patterson & Spreng, 1997;
Schneider & White, 2004; Shonk, 2006; Ying-Feng, Chi-Ming, & Wei-Jaw, 2009).
These relationships are conceptually reflected in the service profit chain, a theoretical
framework developed by Heskett, Jones, Loveman, Sasser, Jr., & Schlesinger (2008).
The model proposes that „[…] profit and growth are stimulated primarily by customer
loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influ-
enced by the value of services provided to customers. Value is created by satisfied,
loyal, and productive employees. Employee satisfaction, in turn, results primarily from
Quality Management Practices for Business Services from a Buyer‟s Perspective
115
high-quality support services and policies that enable employees to deliver results to
customers‟ (Heskett et al., 2008: 120). Consequently, higher service quality may result
in higher satisfaction of internal or external customers and finally in higher sales reve-
nues.
Literature on service purchasing: Many authors assume a positive relationship be-
tween higher levels of purchasing involvement in the procurement process for services
and performance of the buying company. For example, higher involvement of a firm‟s
purchasing department can add value by ensuring that funds are spent properly (i.e. in
accordance with corporate and functional goals), by saving time (either by reducing
the time invested by the client department during the purchasing process or time which
is lost when the service purchase fails) and money (i.e. reducing acquisition costs), but
also by improving the quality of the good or service purchased (see, for example, Bals
& Hartmann, 2007; González-Benito, 2007; Lonsdale & Watson, 2005; Schiele &
McCue, 2006; Young & Varble, 1997; West, 1997). Furthermore, purchasing can con-
tribute to a company‟s level of innovativeness (Krause, Pagell, & Curkovic, 2001) and
access to supplier markets (Walter, Ritter, & Gemünden, 2001). In addition, Mitchell
(1994) pointed out that it could have most hazardous effects on a company if certain
services, such as management consultancy services, are not bought professionally
(Mitchell, 1994). It may thus be concluded, that quality management for externally
sourced business services will mainly be driven by purchasing departments.
B.2.3 Determinants of quality management
Literature on quality management and service purchasing provide initial insights in the
question what may determine the design of quality management for business services.
Literature on quality management: Some studies compared quality management prac-
tices in different industries. Most authors reason that service companies have lower
levels of quality management implementation than manufacturing companies (see, for
example, Benson, Saraph, & Schroeder, 1991; Powell, 1995; Quazi, Jemangin, Kit, &
Kian, 1998; Singh, Feng, & Smith, 2006; Woon, 2000). Rönnbäck & Witell (2008)
argued that the differences between service and manufacturing companies in their us-
age of quality management decrease. However, they stress that single practices, such
as process orientation and employee management, are more important in service than
manufacturing industries. These findings underline the impact the type of industry may
have on the design of quality management for business services.
116 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Literature on service purchasing: The literature on service purchasing does not explic-
itly deal with the design of quality management. However, several authors identified
perceived differences between the purchasing of goods and services. These differences
may be an indication of the peculiar requirements for quality management for business
services. For example, several authors posit that risk is perceived higher in purchasing
of services than of goods as poorly supplied services can cause greater problems than
low-quality goods as they can remain undetected longer (Jackson et al., 1995; West,
1997; Mitchell, 1994). Smeltzer & Ogden (2002) found out that the process activity
which is seen as most complex in purchasing of services is the definition of service
specifications (Smeltzer & Ogden, 2002: 60). Similar results are reported by Ellram et
al. (2007) pointing out that service quality and performance are not as easy to measure
and specify objectively as product quality. Additionally, more recent research on pur-
chasing of services suggests that usage of a business service by a buying company may
affect the buyer-seller interaction (Wynstra et al., 2006; van der Valk, Wynstra, & Ax-
elsson, 2009). Interactions are more intense for services which are bought by the buy-
ing company and then directly transferred to the end customer than for services which
are consumed internally within the buying company Wynstra et al., 2006. On basis of
these findings, van der Valk et al. (2009) propose a classification of business services
consisting of four different types of services:
Consumption services are completely used within the buying organization and
not part of the final offer to the end customer.
Instrumental services are used as tools or instruments by the buying company in
order to produce their own product or service.
Semi-manufactured services are offered to the end customer but only after being
changed by the buying company.
Component services become a rather unaltered part of the offer to the end cus-
tomer.
In sum, the literature on purchasing of services suggests that perceived risk, degree of
specification and usage of the service by the buying company may influence the pur-
chasing process and thus the quality management for business services.
Quality Management Practices for Business Services from a Buyer‟s Perspective
117
B.2.4 Initial research model
The short review of relevant literature on quality management and purchasing of ser-
vices provides us with an initial research model as a basis for further investigation of
the research questions through case studies. Both fields of literature suggest that the
design of quality management may be determined by factors such as type of industry,
perceived risk, degree of specification, the usage of the service by the buying company
etc. These determinants affect the adoption of the seven quality management practices
defined by authors in the area of quality management. The design and adoption of the-
se quality management practices for externally sourced business services by buying
companies may, however, have positive effects (for example, the enhancement of ser-
vice quality, raise of satisfaction, reduction of cost, increase of sales revenues) on the
buying company‟s firm performance. The initial model is depicted in Figure B- 1.
Figure B- 1: Initial research model
B.3 Case study methodology
It was shown in the literature review that the phenomenon of quality management for
externally sourced business services from a buying company‟s perspective is relatively
under-researched. We aim at a profound understanding of the status quo of quality
management for business services and the development of a research model which can
be used for future testing purposes. Miles & Huberman (1994) argues that qualitative
research is particularly appropriate in the early stages of theory building when compa-
rably little is known about the phenomenon under study. More particularly, Siggelkow
(2007) stresses that case studies are valuable in making conceptual contributions.
Therefore, this research adopted an exploratory, multiple, embedded (Yin, 2003) and
comparative (Dul & Hak, 2008; Silverman, 2002) case study design. It is an explorato-
ry case in that this stage of the research process is less concerned with testing existing
Determinants of quality management practices
- Type of industry- Usage of business service- Perceived risk- Degree of specification- Purchasing volume
Design of quality management practices for business services by buying companies
- Quality information- Supplier involvement- Customer involvement - Process management- workforce management- Service design- Top management support
Potential effects of quality management
- Enhancement of servicequality
- Raise of satisfaction- Reduction of cost- Increase of sales revenues
118 Quality Management Practices for Business Services
from a Buyer‟s Perspective
theory rather than investigate little-understood phenomena (Marshall & Rossman,
2006) and developing hypotheses for further research (Hancock & Algozzine, 2006;
Reason, 2006). It is a multiple design as it takes several buying companies as its basic
unit of analysis. At the same time, however, attention is given to informants from sev-
eral departments within the buying companies so that it can be labeled and embedded
design (Yin, 2003). As scores of multiple cases are obtained and matched, it can be
regarded as comparative (Dul & Hak, 2008).
Case selection
Due to the embedded design of case studies in this piece of research, two levels of case
sampling have to be distinguished: (a) the level of the buying companies, and (b) the
level of individual informants within the buying company.
The selection of buying companies is mainly driven by considerations in terms of
„confirming and disconfirming cases‟ (Miles & Huberman, 1994: 28) which seeks ex-
ceptions and looks for variations (Marshall & Rossman, 2006). As elucidated before
differences in the adoption of quality management practices may exist between service
and manufacturing companies which may be particularly valuable for answering the
research questions. The buying companies were therefore selected according to the
type of industry (services as well as manufacturing companies). The diversification of
business type enabled the researchers to discover potential differences in implementa-
tion issues in manufacturing or service companies regarding their quality management
for services. The research was undertaken in spring and summer 2010 in Germany us-
ing eight manufacturing and eight service companies.
The selection of individual informants within the chosen buying companies follows
the approach of seeking „intensity‟ (Miles & Huberman, 1994: 28) which looks for
intense but not necessarily extreme manifestations of the phenomenon under study
(Marshall & Rossman, 2006). As the design of quality management involves many
stakeholders within a buying company (Pfeifer, 2001), it is advisable to include more
than one business function into the target group of the proposed study (Sánchez-
Rodríguez & Martínez-Lorente, 2004). Hence, this research strives to gain insights
from representatives from purchasing, quality management and the departments actu-
ally using the purchased service as these were shown to be key informants regarding
quality management practices in their companies (see, for example, Hemsworth et al.,
2008; Seth, Deshmukh, & Vrat, 2006; van der Valk et al., 2009; Zu, 2009). Individuals
from the latter two groups of informants were identified during an introductory meet-
Quality Management Practices for Business Services from a Buyer‟s Perspective
119
ing with a purchasing informant using a „snowball or chain‟ type of sampling (Mar-
shall & Rossman, 2006: 28).
During the meeting, the purchasing informant was asked to select the services for
which the most comprehensive quality management existed from a list of eleven busi-
ness services. Business or B2B services in this context are understood as services
which are delivered by firms or organizations and bought by other firms or organiza-
tions (Axelsson & Wynstra, 2002; van der Valk & Rozemeijer, 2009). The selection of
business services (see Table B- 2 in the appendix) was developed on basis of two
benchmarking studies on indirect spend management (CAPS Research, 2003; BME,
2005b) and a service classification proposed by Axelsson & Wynstra (2002) in order
to cover as many business services which might be part of a company‟s spend as pos-
sible. Table B- 3 in the appendix presents a summary of the selected companies and
their key characteristics. Table B- 4 in the appendix shows the business services cho-
sen in each company and the function of the interviewees. Each company was labeled
using a reference code to retain anonymity.
Data collection
The key data collection method employed was „semi-structured‟ (Rubin & Rubin,
1995: 5) or „standardized open-ended‟ (Patton, 2002: 342) interviews. This allowed
respondents to express their comments and perceptions freely and thus in-depth data
and a „thick description‟ (Geertz, 1973: 16) of the phenomenon under study could be
obtained. The interview protocol consisted of five main sections: The first section
aimed at obtaining general company and demographic data and selecting the business
services, its purchasing volume etc. The second section contained questions regarding
the actual design of quality management practices at the specific company for the par-
ticular service. The third section comprised questions focusing on the effects of quality
management practices for business services. The final section comprised questions
about the determinants of the design of quality management for business services. A
shortened version of the interview protocol can be seen in the appendix.
In addition, this study used several other components of data collection to triangulate
the interview information and avoid distortions from interviews being used in isolation
(Rubin & Rubin, 1995). First, company archival data were reviewed wherever possi-
ble. Documents included internal (for example, quality management manuals, and
quality management policies, minutes) and official (for example, websites and presen-
120 Quality Management Practices for Business Services
from a Buyer‟s Perspective
tations regarding quality management of the buying company) ones. Second, respond-
ents were requested to review the interview transcripts for accuracy and content. Thus,
„member checking‟ (Stake, 1995: 115) was adopted for factual verification of inter-
view data. In both cases, interviewees were consulted for clarification via telephone or
e-mail where factual inconsistencies occurred.
In total, 32 interviews with 29 respondents from purchasing, quality management or
the internal department requesting and using the selected business service were con-
ducted by one researcher. In seven companies we spoke to more than one informant. In
several instances the same respondent was interviewed regarding different services
separately. The interviews were carried out on a face-to-face basis and tape-recorded
wherever the respondent agreed to it.
Data analysis
Interview information were transcribed and analyzed in a three step process of data
reduction, data display and conclusion drawing suggested by Miles & Huberman
(1994).
Data reduction started with the decision which research questions and which initial
research framework, which cases and which data collection methods to adopt. After
interviews were conducted, the transcripts as the main source of evidence were read
several times to increase familiarity with the topic. After the interviews, the different
documents and audio-visual material mentioned before was scanned. To keep track of
the different sources of evidence, a data matrix was created (Miles & Huberman,
1994).
The next step of data reduction comprised the coding of the transcribed interviews and
the other data sources. The coding „start list‟ (Miles & Huberman, 1994: 60) encom-
passes the concepts derived from the initial research model presented in Section B.2.
This represents an a priori coding frame following the view that „[…] coding must
start with a frame that is well grounded in a theory or conceptual scheme‟ (Araujo,
1995: 97). The coding process was repeated two times to reduce or refine the given
information regarding the categories considered. The next stage was characterized by
the attempt to display the coded data in order to allow conclusions to be drawn. The
coded data was transferred into a large „thematic conceptual matrix‟ (Miles & Huber-
man, 1994: 131) with help of available software. This matrix contrasts the various cas-
es by dissecting the various interviews by themes and their categories so that all inter-
Quality Management Practices for Business Services from a Buyer‟s Perspective
121
view statements on a specific theme or category accumulate under a single label. It
thus allows an efficient comparison of the cases.
In the final step of data analysis, patterns of the utilization and perceptions on the us-
age of quality management practices were detected which allowed the refinement of
the conceptual model and the development of propositions.
B.4 Key findings from the empirical study
In the following chapter the key findings from the empirical study are summarized by
taking each research question and presenting the empirical evidence (see also
Table B- 6 in the appendix).
B.4.1 Design of quality management practices for business services
The results of the case studies regarding the first research question are organized along
the seven quality management practices identified in Section B.2, i.e. quality infor-
mation, supplier and customer involvement, process and workforce management, ser-
vice design as well as management support.
Quality information: Many authors in the area of quality management underline the
need for quality data which is available to all major stakeholders and their regular re-
porting as one key component of quality management for goods manufacturers (see,
for example, Fynes, 1999; Sila & Ebrahimpour, 2003). However, most of the inter-
viewees regarded the extraction and analysis of quality information for externally
sourced business services as more difficult than for goods. The major reason was the
difficulties in specifying the demanded service. The statement of the head of purchas-
ing of S6 is indicative of others:
“Of course, we try to define the demanded service in words clearly written down, sure,
but that is never enough. You cannot define a service as precisely as a product. It is
far more difficult.”
Due to the relative lack of specification, the most prevalent quality information used
for business services was occasional complaints by internal or external service users in
case of quality failures. The relative reliance on such irregular snap-shot information
was considered unfortunate as it was perceived as highly subjective and not necessari-
122 Quality Management Practices for Business Services
from a Buyer‟s Perspective
ly representative of a provider‟s overall performance. As the head of purchasing of M1
depicted:
“Unfortunately, an individual opinion [about the quality of a business service] is ra-
ther situational and sometimes opportunistic. If someone, for example, has just re-
ceived his company car and got a bunch of flowers with it, he will be completely en-
thusiastic. His judgement about the overall service may than be too positive. Or the
company car was delivered long time ago, and he cannot remember, and his judgment
may then be too negative. On basis of such judgements it is difficult for a purchaser to
separate the good service providers from the bad ones.”
Previously defined Key Performance Indicators (KPIs) for externally sourced business
services were therefore not used for all services. Only companies M1 for professional
services, M3 for fleet management, M5 and S3 for facility services, M8 and S7 for
technical maintenance and repairs, S1 for human resource services, and S7 also for
transportation and distribution services implemented a system of KPIs to better man-
age service quality. In cases where no clear KPIs for the service were defined, most
respondents justified it with the difficulties in specifying the service demand precisely.
In the case of M8, S1, and S7 the services were purchased by the focal firm but deliv-
ered to their end customers. It was the end customer who purported these KPIs in their
tender offers. The buying company then adopted these KPIs for their service providers.
In the case of companies M1, M3, M5, and S3 the services were consumed internally
within the buying company. Interestingly, in all cases the service provider was respon-
sible for collecting the KPI data and implemented the systems for data collection and
reporting at the buying company.
The recipients of the KPI results at the buying company included the responsible pur-
chasers and in case of companies M1, M5, M8, S3, and S7 the operating department
which also requested the business service. Purchasers actively used this information
for their negotiations with the service provider. However, only in case of the internally
consumed business services at companies M1 for professional services, M3, and S3
the KPI results were transparently tied to the payment of the supplier. Several heads of
purchasing argued that setting up a direct relation between KPIs and payment might be
too complex and might be detrimental to the relationship to the supplier. As the head
of purchasing of S7 stated:
Quality Management Practices for Business Services from a Buyer‟s Perspective
123
“I once tried to tie the results of these KPIs to payment. It would entail a slew of effort
so that it doesn‟t make sense. […] If you set up something like this, the supplier usual-
ly starts haggling. If you have a long-time partnership, this only causes bad blood.”
In no case, the available quality information was regularly depicted graphically and
displayed at the point of consumption as it is suggested for goods (Flynn et al., 1994;
Saraph et al., 1989).
Supplier involvement: The literature on quality management suggests that reliance on
reasonably few suppliers, long-term supplier relationships, vendor assessments and
certifications support the improvement of the quality of goods (Saraph et al., 1989;
Flynn et al., 1994). Interview data revealed that buying companies strive for long-term
relationships with service providers, and that evaluations of service providers are a
common tool of quality management. However, in most cases supplier evaluation does
not result in systematic measures to improve service quality. Furthermore, audits are
only in a few cases used by buying companies.
The clear majority of heads of purchasing and purchasers underlined that they not only
pursuit long-term relationships with their suppliers of goods but also with service pro-
viders. Long-term relationships with service providers were regarded as an important
way of improving service quality as they were associated with higher degrees of trust
on both sides, better understanding of requirements and lower transaction costs. A
change of a service provider, by contrast, created relatively high costs. The head of
purchasing of company M2 made a statement representative of others:
“I think the most important reason why we try to maintain long-term relationships
with our service suppliers is trust. The nearly blind trust that develops if you know
each other for years. […] Sometimes my colleagues say: They [the service provider]
exactly know what makes us tick. And you should not forget that each new supplier
means more work. That is often what the colleagues try to avoid.”
All heads of purchasing followed the objective to further reduce the number of service
providers managed by purchasing. This was seen as a necessary prerequisite for more
strategic and long-term relationships. However, only the head of purchasing at compa-
ny M5 regarded this target already being reached for computer implementation and
maintenance services. One cause for the non-achievement of service provider reduc-
tion targets was the lack of reliable information to distinguish suppliers performing
high on quality from those performing low.
124 Quality Management Practices for Business Services
from a Buyer‟s Perspective
The companies M1, M4, M6, M7, S1, S2, S4, and S5 have implemented a system to
evaluate their service providers to mitigate this challenge. Companies M1, M4, M6,
M7, S2 and S4 adopted supplier evaluation for all kinds of their service providers.
Thus, these organizations evaluated providers of all services according to the same
criteria. Company S1, however, only used the supplier evaluation for human resource
services and S5 only for fleet management services. These companies had adjusted the
evaluation criteria to these particular services. Only company M6 used supplier eval-
uation for all kinds of its service providers but at the same time had adjusted the evalu-
ation sub-criteria to the service. It has to be noted that the purchasers of company M1
and the head of purchasing of company S2 strongly suggested adjusting their supplier
evaluation towards a system which better considers peculiar characteristics of the par-
ticular service, for example, by adjusting sub-criteria of the evaluation for each busi-
ness service. This was also recommended by the quality manager at company M1 who
stated:
“You do not have to use the same criteria for each and every service. This is anyway
difficult because services are so different. […] In production material, we have 18 dif-
ferent commodity groups and therefore, we also have a lot of different standards for
quality, for suppliers, there, too. I don‟t see any problem for services there.”
Companies M4, M6, M7, S2, and S4 coupled the results of the service provider eval-
uation with standardized actions. For example, in company M7, the supplier had to
give a written statement, define counter measures with deadlines, discuss the results
with senior management in personal meetings, and face a new audit if the evaluation
results undercut a certain level. Only at company M4, however, the outcomes of the
provider assessment were directly linked to the suppliers‟ payment. In this case, the
supplier had to grant an additional discount if the evaluation results dropped below a
pre-defined level.
Audits were only used during the selection process of any service provider by compa-
nies M6, M7, S2, and S4. However, according to all respondents from these compa-
nies, the maturity of these audits did not yet reach the level of audits for suppliers of
goods. Rather, audits for service providers were regarded as unstructured visits of ser-
vice suppliers‟ sites. The head of purchasing of M7 felt a strong pressure to conduct
such provider assessments and audits in order to obtain quality certifications for the
buying company (for example, International Food Standard, SA 8000).
Quality Management Practices for Business Services from a Buyer‟s Perspective
125
Customer involvement: Most authors in quality management agree that customer in-
volvement entailing, for instance, close cooperation with customers, receiving regular
feedback from them, measuring their satisfaction, and field visits are integral parts of a
system managing the quality of goods delivered by the buying company (see, for ex-
ample, Flynn et al., 1994; Zu, 2009). The case data showed, however, that purchasing
is usually not in contact with the actual internal or external service user. Only in very
few cases, purchasing managers receive feedback from service end-users regarding
their satisfaction.
The interviews revealed that all heads of purchasing regarded the internal operating
department requesting the business services as their main customer. This view resulted
in regular interactions between purchasing and the operating department. By contrast,
contacts between purchasing and the internal users of the business services had an ir-
regular and more occasional character if at all existing. In case of M5 for computer
implementation and maintenance services the lack of direct contact between purchas-
ing and internal service users was deliberately chosen as the head of purchasing stated:
“In this area I really don‟t want to have contacts to our internal users. I also resist
accepting advice from them. It would otherwise be information overkill. Because in
that area everyone is a know-it-all.”
An exception to this was found at company S4 where the final internal service users
were part of regular meetings between purchasing and the operating department.
Although in case of M1 (transportation and distribution services), M2 (marketing ser-
vices), M8 (technical maintenance and repairs), S1 (human resource services), S2
(marketing services), and S7 (transportation and distribution services, technical
maintenance and repairs) externally sourced business services were transferred to the
end customer of the buying company, the purchasing department in none of these cas-
es had regular contact with them. Only in S5 (fleet management services) where the
operating department was also responsible for the purchasing of the service, regular
phone contacts between the operating department and end customers were established.
In addition, purchasing in no case undertook regular field visits at end customers‟ sites
in order to obtain an insight into their requirements regarding the business service.
In companies M1, M6, M7, S1, S2, and S4, which all implemented a supplier evalua-
tion, the responsible purchaser also invited the operating departments demanding the
business services to participate in the provider assessment. In M4, by contrast, the
supplier was only evaluated by the responsible purchaser and in S5 the specialist de-
126 Quality Management Practices for Business Services
from a Buyer‟s Perspective
partment is the only department involved in the evaluation for fleet management ser-
vices.
In addition to supplier evaluations, the operating departments or internal users of the
business service were in no company surveyed regarding their satisfaction with the
business service in a structured manner. The only exception was found at S3 for an
internally consumed service (facility services) where a satisfaction survey was yearly
carried out by the service provider as part of its service offering.
Such satisfaction surveys were more common in cases where externally sourced busi-
ness services were transferred to the end customer of the buying company. For the ser-
vices discussed at M8, S1, and S7 as well as for fleet management services at S5, regu-
lar satisfaction surveys of external service users were conducted.
Process management: Authors in the area of quality management subsume factors
such as „quality inspection‟, „process control‟, „process and role definitions‟ and „sta-
tistical process control‟ (see, for example, Molina-Azorín et al., 2009; Saraph et al.,
1989; ) under process management. The interview data indicate that services are in
most companies checked in terms of their general provision but not regarding quality.
Process definitions and the control of process by use of statistical techniques are not
common tools for quality management for externally sourced business services.
The predominant method of inspection of the quality of the business service was to
obtain service receipt notes after the business service had been delivered. Service re-
ceipt notes were used by M1, M4, M5, M6, M7, S1, S2, and S4 for services which are
consumed internally. In these cases the operating departments requesting the service
issued the service receipt notes in an electronic purchasing system or – in case of M4 –
by paper. M1 also used service receipt notes for transportation and distribution ser-
vices delivered to their end customers. In this case, the end customer had to
acknowledge the receipt of the delivered product on a paper note. In all cases, the ser-
vice receipt notes were used to confirm or disconfirm the service delivery in general.
For example, at M4, M6 and M7 the operating department requesting internally con-
sumed technical maintenance and repair services had to approve that the working
hours specified by the purchase order had actually been accomplished. The payment of
the service provider in these cases was reduced if the requested working hours had not
or only partially been executed. A link between payment and the evaluation of other
quality criteria did not exist on the level of single services in any of the companies us-
ing service receipt notes.
Quality Management Practices for Business Services from a Buyer‟s Perspective
127
Only company S1 combined issuing the service receipt note with a small satisfaction
survey of the requesting department on the level of the single service which was then
transferred to the end customer. Only in this case, the average results of the service
receipt notes were an integral part of the supplier evaluation system and provided a
regular data basis for it. It has to be noted, however, that several companies planned to
combine a short satisfaction survey regarding service quality with the confirmation of
the service receipt notes. These companies wanted to use more regular and real-time
data on the level of single services to obtain a more accurate judgement of the satisfac-
tion with the service quality. As the head of purchasing at company M2 explained:
“We think it would be a good idea to introduce a short satisfaction survey that will be
completed with every service receipt note. Because – if you only ask for a supplier as-
sessment at the beginning of the year the judgment of the operating department is
mostly influenced by experiences of the last couple of days or weeks. These impres-
sions might be wrong as they cannot be representative for the whole year.”
In no case sampling techniques were used to select the single services for which a ser-
vice receipt note had to be approved. Rather, these companies decided to demand a
service receipt note for each service delivered.
Process manuals as an instrument of quality management for business services were
only mentioned to exist at company S7. They were developed by the service provider
for both services discussed. However, the head of purchasing considered them not de-
tailed and explicit enough as he
„[…] cannot ask another service supplier to make an offer on basis of the process doc-
umentation. This is practically still not possible without the current provider. It would
need far more information from him.‟
Workforce management: In the literature, factors such as „training‟, „employee in-
volvement‟, „recognition and reward‟, and „quality circles‟ are – among others – re-
garded as important components of a successful quality management (see, for exam-
ple, Sánchez-Rodríguez & Martínez-Lorente, 2004; Powell, 1995; Zu, 2009). The case
study results suggest that training regarding quality management of services is not
used by buying companies and employees are not measured according to service quali-
ty results. Quality circles are only used at companies where these were implemented
during improvement programs for production processes.
With the exception of S5, all companies which had implemented a system for the
evaluation of their service providers (i.e. companies M1, M4, M6, M7, S1, S2, and S4)
128 Quality Management Practices for Business Services
from a Buyer‟s Perspective
provided special trainings about it to employees involved in supplier assessment. In
most of these companies, the employee who was supposed to participate in provider
assessment received a manual explaining its major functionalities by the purchasing
department. Only in S4, in-person trainings were held by purchasers regarding the
supplier evaluation. In none of the companies, however, trainings focussing on other
related aspects of quality management for services (for example, regarding potential
instruments for management of service quality, trainings on statistical methods etc.)
were organized.
No company set targets for its quality managers, purchasers, or members of operating
departments regarding the development of quality of externally sourced business ser-
vices. The difficulties in measuring service quality were mentioned as one of the rea-
sons for this relative lack of target setting by heads of purchasing at several companies
and the quality managers at companies M1 and M3. As the head of purchasing of
company M8 stated:
“For production material, we definitely have such targets for purchasers and quality
managers. In the area of non-production material and services we are not as far yet.
We just can‟t measure it precisely right now. As purchasing, we are now happy that
we are involved in these things at all.”
Solely in M7, S2, S4 purchasers were among other targets measured according to the
number of completed service provider evaluations. In S5 employees of the operating
department requesting fleet management services was measured according the number
of suppliers they assessed.
Only companies M4 and M6 used officially dedicated quality circles, i.e. voluntary
and regular workgroup meetings to discuss, analyze and solve quality problems com-
mon to the group (Drago, 1988) for their technical maintenance and repair services.
These services were used for upholding their production facilities. In both cases, the
quality circles were set up as part of an existing continuous improvement programme
in production.
S7 was the only company where the head of purchasing undertook an attempt to better
involve the service personnel of the provider and connect them with the purchasers of
his department. He considered it essential to motivate them to deliver excellent service
quality. The requested budget for the team event was not granted as the advantage of
such an activity for increasing the satisfaction of service personnel was not seen by top
management.
Quality Management Practices for Business Services from a Buyer‟s Perspective
129
Service design: We investigated how buying companies design their externally
sourced services with regard to „cross-functional project teams‟, „joint product devel-
opment‟ and „design reviews‟ (see, for example, Ahire, Landeros, & Golhar, 1995;
Fynes & Voss, 2002). The information given by interviewees displayed that services
are in most companies purchased by cross-functional teams consisting of purchasers
and representatives from the requesting department but no internal or external service
users. Service vendors are considered having a broader knowledge about service de-
velopment than internal resources. Their impact during service design is, however,
limited.
Nearly all interviewees from all functions stressed the importance of a thorough ser-
vice design during tendering as it was seen as crucial for the service quality later de-
livered. One statement of the head of purchasing of M5 is indicative of others:
“You would quickly notice if someone did a sloppy job during tendering and supplier
selection and who did it. […] You‟ll see that you should have asked this or that ques-
tion more or that the definition of services wasn‟t clear enough.”
Almost all respondents emphasized the need for working cross-functionally during the
service design phase. This was particularly true in cases, where the tendering process
was led by purchasing. In these cases, cross-functional teams consisted of purchasing
and the operational department requesting the business service. Additional depart-
ments, for example, the legal or finance department, were consulted for particular
technical questions. An exception was M3, S1, and S7 for transportation and distribu-
tion services where purchasing alone was responsible for tendering and no cross-
functional team was set up for it. By contrast, purchasing was not involved in the de-
sign of services where the operating department not only requested the service but also
purchased it. This was the case in company S5 for fleet management.
Although several heads of purchasing (M1, M2, S2, S5, and S7) considered the service
provider as more proficient in service design than the buying company, the supplier‟s
influence on service specifications varied according to the degree of service definition
reached by the buying company. In cases where the buying company was in the posi-
tion to base their tendering documents on reportedly well-defined services (for exam-
ple, at M1 for human resource and transportation and distribution services, M3, M4,
M5, M6, M7, M8, S1, and S3) suggestions by the service provider on service specifi-
cations were not particularly credited during the tendering process. Rather, they were
130 Quality Management Practices for Business Services
from a Buyer‟s Perspective
viewed with skepticism. For example, the head of the operating department requesting
facility services at company M5 stated:
“The definition of the service has to come from us although it is not our core business
[…], but that of the service provider. But we only appreciate if he makes suggestions
that are not only advantageous to him. Otherwise, such suggestions are giving him a
big, big minus.”
This attitude was particularly prominent for technical maintenance and repair services
which were considered purported by technical standards or legislation.
However, in cases where the purchasing or requesting departments stated not being
able to revert to clearly pre-defined service specifications (for example, at M2, S2 and
S6 for marketing services, S4, and S7 for transportation and distribution services), the
service provider was asked to actively provide suggestions for service definitions and
specifications. For example, the head of purchasing at M2 stated:
“In this case, the marketing department provided the information on corporate identi-
ty, official colours and things like that. But the provider was pretty free to specify how
he wanted to offer the service. We didn‟t have enough details and didn‟t want to limit
his creativity.”
The head of purchasing at S7 similarly stated for transportation and distribution ser-
vices:
“In that area we didn‟t have pre-defined service specifications. So, we asked the pro-
vider: What is the best you can give us?”
None of the companies had introduced a structured design review process for the ser-
vices discussed. Rather, companies M1 and S5 for professional services, M5, M7, and
S3 concluded contracts with the service provider which allowed terminating the con-
tract after a short testing phase of three to six months.
Management support: We examined the quality management practice management
support along the lines of „top management involvement‟ and „setting clear quality
objectives‟. These factors are mentioned by several authors as important for effective
quality management (Ahire et al., 1995; Dean, Jr. & Bowen, 1995). The interviewees
disclosed that top management‟s participation in the management of quality of busi-
ness services is rather limited. In some cases top management set targets on the num-
ber of supplier evaluations but not regarding the development of service quality.
Quality Management Practices for Business Services from a Buyer‟s Perspective
131
Only at M5, top management above the head of purchasing regularly discussed the
quality of externally sourced technical maintenance and repair services which were
directly transferred to M5‟s end customer. In this case, top management received regu-
lar reports on specific aspects of service quality such as in-time delivery and the end
customer contacted top management in case of quality failures. The head of purchas-
ing elucidated:
“If this service is not working well, even top management will get a chewing out by the
customer. I mean it depends on the size of the customer but usually there is highest
management attention on quality. They regularly discuss it. That is a big difference to
services which are consumed internally by us.”
At some companies (M1, M6, M7, and S4) where a system of provider assessment was
established, top management was regularly informed about the results on an aggregat-
ed level. However, a reaction of top management to the results was sparse. The state-
ment of the head of purchasing at S4 was indicative of others:
“Top management gets a yearly report on the evaluation of our top 10 service provid-
ers. But they usually don‟t ask back.”
Some respondents stressed that top management occasionally cares about the quality
of externally sourced business services. This was the case when there were changes to
the service or “[…] there is something to complain about” (head of operating depart-
ment, S3). This was frequently seen as an additional risk which had to be addressed by
particularly intensive, personal quality inspections. As the head of operating depart-
ment at M5 explained:
“When we talk about facility services there is a special risk if you change the service.
For example, we tried to involve top management when we changed the supplier. […]
The same is true for representative areas inside or outside. Top management is strong-
ly interested in these areas. […] And, of course, we strive to adjust to these attitudes
and control quality in such areas even more intensively.”
At companies M7, S2, S4, and S5 for fleet management services, top management set
objectives for heads of purchasing regarding the number of service providers to be
evaluated. Other targets defined by top management regarding the quality of externally
sourced business services were not reported.
The major findings regarding the design of quality management practices for business
services on a company level are summarized in Table B- 6.
132 Quality Management Practices for Business Services
from a Buyer‟s Perspective
B.4.2 Relationship between quality management, service quality and firm per-
formance
Regarding the second research question, interview data revealed that interviewees
from all functional backgrounds perceived positive effects of quality management for
externally sourced business services.
The strongest and most positive relationship was experienced between the usage of
quality management practices and service quality by nearly all interviewees. This rela-
tionship appeared to be most evident at companies M1, M4, M6, M7, S1, S2, S4, and
S5 which had also implemented a system of provider evaluation. Furthermore, some of
the companies which utilized pre-defined KPIs for the management of quality (for ex-
ample, M1 for professional services, M8, S3, and S7) reported on particularly strong
improvements of service quality after their implementation.
Quality management was concealed as affecting service quality by regularly confront-
ing the service provider with its quality issues and causing the supplier to improve its
quality continuously. Numerous examples were given for this connection between
quality management and service quality. The following statement by the head of pur-
chasing at M1 is indicative of other comments:
“I discussed many assessment results with service providers […] and they almost al-
ways take it very serious. They discuss it internally in their teams. […] And usually –
after one or two months – they come back to us with their CEO and present their activ-
ity lists and what they have already done. And I can remember a lot of cases where
they definitely improved the quality of their services. […] For example, by giving bet-
ter advice, bringing more or other employees to us, more transparent price structures,
or even establishing a small subsidiary near our plant to be in closer contact with us.”
Companies M1, M6, M7, S1, S2, and S5 for fleet management also regarded supplier
evaluation as an instrument to identify low-performing service providers. These pro-
viders were then phased out over time which led to a higher overall level of quality for
that specific service. Thus, they represent examples of the second way of quality man-
agement influencing service quality. As the head of purchasing of M6 stated:
“The supplier evaluation showed us how bad some service providers really are. It
gave us a more objective basis to switch them. […] And most of the new suppliers def-
initely provide a far better quality.”
Quality Management Practices for Business Services from a Buyer‟s Perspective
133
The increased service quality resulted in increased satisfaction of internal or external
customers. In case of business services internally consumed by the buying company, a
rise of satisfaction of internal service customers was perceived after measures of quali-
ty management were established. The increase of satisfaction was mainly noticed as a
decrease of complaints or active accolade related to service quality by heads of pur-
chasing, purchasers and heads of operating departments (for example, at M1 for pro-
fessional and human resource services, M5, M6, M7, S3, S4). However, in most of
these cases this change of satisfaction of internal customers was not measured and was
thus based on the individual perceptions of interviewees. An exception was S3, where
the satisfaction of internal customers was measured yearly and had considerably im-
proved over the last four years since quality management practices were adopted for
facility services.
A similar picture was drawn for externally sourced business services which were trans-
ferred to the end customer. Again, heads of purchasing at M1 (for transportation and
distribution services), M8, S1, and S7 provided anecdotal records for a positive rela-
tionship between service quality and end customer satisfaction. The statement of the
head of purchasing at M1 is exemplary for others:
“We were rather surprised that the optimized quality of these services [transportation
and distribution services] had such an effect on public image. There were customers
who called us and said: „Wow, your company has an optimized logistics service.
That‟s good for me as a customer.‟ […] And our CEO gave us the feedback that she
herself didn‟t expect that this would have such an impact.”
At M8, S1, S7, and S5 such perceptions could also be supported by results of customer
surveys. The positive effects of the quality of the particular service on end customer
satisfaction were recorded at M8 and S5 where the surveys were specifically imple-
mented to measure the satisfaction of end customers with the specific service.
The effects of using quality management for services on cost reduction were mostly
considered as weaker but still existing. In cases where interviewees reported on cost
reductions, they were mostly achieved by improved provider selection based on in-
creased transparency due to more comprehensive quality information.
Heads of purchasing and purchasers at M1, M7, S1, and S2 used quality data to sort
out low-performing providers and switch to suppliers which offered a higher-quality
service at lower prices. The improved conditions of contracts led to a reduction of cost.
As the head of purchasing at M7 pointed out:
134 Quality Management Practices for Business Services
from a Buyer‟s Perspective
“Our new quality management gave us more information about a provider‟s quality. It
gave us a more objective basis for switching bad suppliers. With the new supplier the
quality is much better. […] And costs could be changed positively by switching the
supplier, too.”
At M1, M7, S1, and S2 the heads of purchasing also referred to examples, where cost
reductions could be achieved by using improved quality information and service de-
sign without switching suppliers or by avoiding additional costs. In such cases, the
information was used to pinpoint quality deficiencies which made the provider, for
example, deploy more of its staff on a project at the same costs. Furthermore, during
an intensified service definition during tendering, parts of services which were not re-
quired by the buying company could be identified and deleted from the contract.
Interestingly, in no case a direct relationship between quality management or increased
service quality and sales revenues could be detected. As could be expected this was
particularly true for services which were consumed by the buying company as these
were not transferred to the end customers. The head of purchasing at M5 significantly
expressed:
“I clearly see that our employees are more satisfied with computer maintenance now.
But if I would say, we sold one product more because of the high quality of that ser-
vice that would be too far-fetched.”
At companies, where also services which were transferred to the end customer were
discussed, the connection between quality management or increased service quality
and sales was considered hypothetically existing but not verifiable. As the head of op-
erating department at S5 stated:
“We saw a significant increase of the sales number of our service during the last years
and we think that the increased service quality had a positive effect on the satisfaction
of our customers with the product. But whether it also had an effect on sales numbers?
Well, I don‟t know. I can definitely say that we don‟t measure it. And probably there
will be lots of other factors that influence sales numbers, too.”
As could be shown in the previous section, the activities companies undertook in the
area of quality management for business services varied significantly in terms of prac-
tices used and the intensity of their adoption. Overall, however, there seemed to be a
consensus among interviewees that the benefits of quality management outweigh its
costs of implementation and maintenance by far. The heads of purchasing, purchasers
Quality Management Practices for Business Services from a Buyer‟s Perspective
135
of M1, M5, M6, M8, S1, S2, S3, S4, and S7 as well as the heads of operating depart-
ments at M1, M5, M6, and S3 thus stated that quality management for business ser-
vices created additional value.
B.4.3 Major determinants of the design of quality management practices
Three major factors have been identified which were regarded as major determinants
of the design of quality management practices for externally sourced business services:
(a) the usage of the service by the buying company, (b) the perceived risk associated
with quality failures, and (c) the degree of standardization of the specific service.
Usage: The way, the buying company used the service, was seen as the most important
dimension according to which the buying company designed or should design its
quality management. Heads of purchasing and purchasers of companies M1, M2, M3,
M5, M8, S1, S6, S7 as well as quality managers from M1, M3, and M4 and the head
of the operating department at S5 acclaimed to this interrelation. Most interviewees
recommended putting more effort into quality management for services transferred to
end customers than into services which are internally consumed. As the head of pur-
chasing at M8 stated:
“If we look at services that we consume internally here at M8, you will see that some-
thing like a quality management does not exist. […] We only regularly check the quali-
ty for this service [technical maintenance and repair] because it is delivered to our
end customer.”
It has to be noted, however, that the same service, for example, technical maintenance
and repairs was used in different ways by the companies. At M4, M6, and M7 it was
consumed internally for upholding the production facilities of the buying companies.
At M8, by contrast, it was transferred to end customers for installing, maintaining and
repairing previously delivered end products at the end customers‟ sites. The buying
companies therefore adjusted their quality management to the distinct usage of these
services. For instance, M8 set priorities in adopting techniques from quality infor-
mation (for example, KPIs), and customer involvement (for example, end customer
satisfaction surveys), whereas at M4, M6, and M7 more emphasis was put on instru-
ments from the practices supplier involvement and process management (for example,
supplier evaluation, service receipt).
136 Quality Management Practices for Business Services
from a Buyer‟s Perspective
At M4, M6, and M7 some interviewees also made a distinction in their efforts for
quality management between internally consumed services. They stated that their ef-
forts of quality management are more intense for services which affect the production
process than for services which do not. Therefore, they considered the quality man-
agement for technical maintenance and repair services as more mature than for inter-
nally consumed services such as office cleaning. The intensity with which these com-
panies particularly implemented process management for these services corroborates
this impression.
Degree of specification: The degree of service specification was also viewed as having
a major impact on how quality management for services is or should be designed. The
heads of purchasing at M2, M5, and M7 as well as the purchaser and the head of the
operating department at M6 advanced the opinion that certain quality management
practices can be easier and more comprehensively implemented when the degree of
service specification is high. As the head of purchasing at M5 stated:
“If we talk about a highly specified and well-defined service, of course, you can con-
trol the delivered quality far easier. […] Take facility management as an example.
There, you can define that the provider has to empty the bins once a week. And if he
doesn‟t do it you can prove it.”
At companies M4, M6, and M7 where technical maintenance and repair services were
used to uphold the buying company‟s production facilities, the interviewees pointed
out that the service is also specified by norms, for example, for the maintenance of air
conditioning. In these cases, such norms and legal regulations also prescribed how to
use certain practices of quality management. For example, it was stipulated which
quality information to gather and how to conduct process management.
Risk: Another recurring theme was that perceived risk influences the design of the
quality management for business services. This determinant was particularly regarded
important by the quality managers at M1 and M4 but also by heads of purchasing at
M2, M7, S1, S4, S5 and S7. The quality manager at M1 strongly recommended adjust-
ing the efforts for quality management of business services according to the risk of
quality failures. He commented:
“If I would like to improve the quality management for services, I wouldn‟t focus so
much on volume but more on the leverage a failure would have. […] For example,
according to the risk if a failure can shut down the production lines.”
Quality Management Practices for Business Services from a Buyer‟s Perspective
137
Risk was perceived as being different from usage of the business service. For example,
services which were transferred to the customer were not automatically associated
with higher risk. As the head of purchasing at M8 explained the downtime of a produc-
tion line due to low-quality maintenance, for example, might have a more detrimental
effect than loosing a customer due to bad service. Previously described interview data
also bolster the notion of perceived risk as an important determinant of quality man-
agement practices for business services. For example, in case of M5 for facility ser-
vices, varying management attention to particular aspects of the service were regarded
as a risk and personal inspections of the service provider were adjusted to this.
Volume: Surprisingly, the purchasing volume of the business service was not per-
ceived as a significant influential factor to which buying companies adapted their qual-
ity management for services by all interviewees. It was mentioned by the heads of pur-
chasing at S2, S6, the purchaser at S4, and the quality managers at M1 and M4. How-
ever, volume in none of these cases was used to determine the design of quality man-
agement per se but the sequence of services for which practices of quality management
were introduced. For example, at S2 and S4, the purchasing volume of the business
service served as a basis of the decision for which services quality management should
be implemented first. However, the design of quality management practices in these
companies remained the same for each service regardless their purchasing volume. As
the head of purchasing at S2 pointed out:
“The sequence, in which we started quality management for the different services, was
mainly determined by the volume. At first, we started with professional services as they
at that time had the biggest volume.”
Industry: Despite the opinion of the head of purchasing of S5 who posited that the lev-
el of professionalization of purchasing was higher in manufacturing than in service
companies, significant distinctions in the design of quality management between man-
ufacturing and service companies could not be detected in this case study. For exam-
ple, we could not find systematic variation in the way supplier selection was utilized in
manufacturing and service companies. It has to be stressed, however, that there may be
differences in the frequency quality management practices are adopted between indus-
tries. This question cannot be answered by case studies, however, and is thus suggest-
ed to be subject to additional research.
138 Quality Management Practices for Business Services
from a Buyer‟s Perspective
B.5 Discussion and conceptual model
The following section summarizes and discusses the results of the empirical findings.
Based on these results a conceptual model and seven propositions (PP) will be pre-
sented for further research.
As elucidated above, the usage of the externally sourced business service by the buy-
ing company influences the design of its quality management practices. Therefore, we
propose:
PP 1: The usage of a business service by the buying company is perceived as one
major determinant of the design of quality management practices for business
services by buying companies.
Interview data revealed that usage was seen as the most influential factor of quality
management for services. Some companies designed certain practices of quality man-
agement according to usage of the service. For example, where services were trans-
ferred to end customers of the buying company, customer involvement was more in-
tense and quality information in terms of KPIs was more often available than for most
services consumed internally. The emphasis of service usage as an important compo-
nent of service purchasing is in line with previous work by Wynstra et al. (2006). They
argue that the usage of a business service by the buying company influences the buyer-
seller interaction and suggest a classification consisting of the four different types of
services (Wynstra et al., 2006; van der Valk et al., 2009).
It has to be noted, however, that the case study results presented earlier do not support
a distinction between semi-manufactured and component services as no interviewee
made a differentiation between them. As the head of purchasing at S7 stated when
asked to comment on that:
“Actually I do not think that we have any service which is given to our customers
without being changed in at least some way. I think as a buying company you always
do something with the service before you give it to your customers, don‟t you?”
By contrast, the distinction between services transferred to the end customer, instru-
mental, and consumption services was drawn by many interviewees and had an impact
on their quality management.
Quality Management Practices for Business Services from a Buyer‟s Perspective
139
In addition to usage, the degree of specification of the service externally purchased
was regarded as a major factor determining quality management practices by several
interviewees. Hence, we posit:
PP 2: The degree of specification of a business service is perceived as one major
determinant of the design of quality management practices for business ser-
vices by buying companies.
The degree of service specification was particularly considered as influencing the
practices of quality information and service design. Some interviewees posited that the
higher the degree of specification, the easier it is to obtain quality information and
control the delivered service quality. In addition, the service provider was less in-
volved in service design where the degree of specification was considered high.
Some previous research has shown that purchasing of services is associated with high-
er risk than purchasing of goods (Jackson et al., 1995; West, 1997; Mitchell, 1994).
Accordingly, case data of this study revealed that purchasers and quality managers
consider perceived risk as one major influencing factor of quality management design
for services. Therefore, we suggest:
PP 3: Risk of a quality failure is perceived as one major determinant of the design of
quality management practices for business services by buying companies.
Risk was mainly understood by the case companies as the potential damage a service
failure could cause. It was perceived different from volume and usage as failures of
low-value internally consumed business services could still have a major impact on the
buying company. For example, a supplier delivering low-quality technical mainte-
nance could cause breakdowns of production machines. This could have detrimental
effects on the buying company although the purchasing value of the actual service is
comparably low and it is consumed internally.
As could be shown in the previous chapter, purchasing volume and industry were not
considered major determinants of the design of quality management by the interview-
ees. This is surprising as literature on supply management suggests that volume pro-
vides a major decision support in strategic purchasing decisions (see, for example,
Kraljic, 1983). The case evidence, however, showed that the volume of the purchased
service only influences the sequence for which quality management practices were
introduced. A relationship between volume and the design of quality management
practices could however not be observed.
140 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Literature on quality management posits that manufacturing companies use more so-
phisticated quality management practices than service companies. Also this relation
between industry (manufacturing vs. service) and design of quality management prac-
tices for externally sourced business services could not be replicated in the case stud-
ies. However, more research has to be done to confirm this insight.
The major goal of the implementation of quality management in companies is to im-
prove the quality of the goods or services bought or offered. As the interviewee data
confirmed, the utilization of quality management practices for externally sourced busi-
ness services results in an improved level of quality of these services delivered by the
providers. We therefore suggest:
PP 4: The adoption of quality management practices for business services by buying
companies is positively related to the perceived service quality of externally
sourced business services.
As already shown in the previous chapter, a positive relationship between quality
management and service quality had various sources. For example, the utilization of
quality information provided the responsible purchaser with the required data to better
evaluate a provider‟s service quality. This led to higher motivation of the providers to
deliver services at the required quality level.
Ample amount of research indicates that service quality is positively related to satis-
faction of end customers (Churchill & Surprenant, 1982; Cronin, Jr. & Taylor, 1992;
Cronin, Jr. et al., 2000; Schneider & White, 2004; Storbacka et al., 1994; Woodside et
al., 1989). The available case data reveals that representatives of most companies also
experienced this relationship. Enhanced service quality of internally consumed ser-
vices improved satisfaction of internal customers whereas improved service quality of
services transferred to end customers positively affected satisfaction of end customers.
Thus, we suggest:
PP 5: There is a perceived positive relationship between service quality and satisfac-
tion of internal or external service consumers.
As elucidated in the previous chapter, the effect of quality management on cost was
considered weaker but still existing. A positive relationship between quality manage-
ment and cost reduction is predicted by literature in the area of quality management
(cf. Deming, 1982; Garvin, 1984; Garvin, 1988; Molina-Azorín et al., 2009; Sousa &
Voss, 2002; White, 1996). Accordingly, we propose:
Quality Management Practices for Business Services from a Buyer‟s Perspective
141
PP 6: There is a perceived positive relationship between quality management prac-
tices for externally sourced business services cost reduction.
It has to be stressed, however, that neither the effects of quality management on costs
nor on service quality or satisfaction were clearly measured in any of the companies.
In no case, any of these constructs was quantified before and after quality management
practices were implemented. Consequently, it is difficult for researchers to find quanti-
tative proof of the effects of quality management or to separate the effects of quality
management from other measures the company implemented simultaneously.
Some authors emphasize that quality management can only have positive effects on a
firm‟s profitability if the cost of implementing and maintaining quality management is
outweighed by its performance contributions (Crosby, 1984; Deming, 1982; Garvin,
1984; Garvin, 1988). Hence, a buying company may only utilize quality management
practices for externally sourced business services if the benefits exceed the cost and
thus value is created. We would like to reflect this implication by the following propo-
sition:
PP 7: The raised satisfaction of internal or external service consumers and the cost
decreased by quality management outweigh the cost for implementation and
maintenance of the quality management practices.
These initial propositions outline the preliminary research framework depicted in Fig-
ure B- 2.
142 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Figure B- 2: The conceptual model
B.6 Conclusion
Business services represent a significant portion of a buying company‟s expenditures.
However, research on purchasing of business services in general and on quality man-
agement for business services in particular is relatively scarce. This paper wants to
shed more light on the questions what determines the design of quality management
for business services, how buying companies use quality management practices for
managing the quality of their externally sourced business services and what the effects
of their quality management for services are.
In doing so, we analyze literature on quality management, service quality and purchas-
ing of services related to the research questions. Based on the literature review we ap-
proached the research questions by an exploratory, multiple, embedded and compara-
tive case study design (Yin, 2003; Dul & Hak, 2008; Silverman, 2002). In total, 32
practitioners from purchasing, quality management and/or the internal department re-
questing the selected business service from 16 manufacturing and service companies
were interviewed.
This paper contributes to the development of theory in the area of quality management
by taking a purchasing perspective and adding externally sourced business services
into the existing knowledge base. It thus expands and extends academic knowledge
developed by previous studies (see, for example, Hemsworth et al., 2008; Hemsworth
et al., 2005; Sánchez-Rodríguez & Martínez-Lorente, 2004) which were in part pre-
Quality Management Practices for Business Services from a Buyer‟s Perspective
143
sented in this journal. Furthermore, it provides managerial insights for the manage-
ment of externally sourced business services.
B.6.1 Managerial implications
From a managerial perspective, key findings from our exploratory study can be sum-
marized as follows:
The share of externally sourced business services on a buying company‟s spend
volume may even rise in the future due to a continuous trend towards outsourcing
(Cox et al., 2005; Ellram et al., 2007; Fuller, 1998; Miettinen et al., 2005; Murray
& Kotabe, 1999; van der Valk & Rozemeijer, 2009). This will also call for a
more systematic approach to managing the service quality delivered by external
providers.
So far, however, the companies selected for this study have not yet implemented
comprehensive quality management systems but mainly focused on single prac-
tices which were mostly used in the same way for all types of services. This may
not reflect the complexity and heterogeneity of business services. Furthermore,
practices such as customer involvement, process management and service design
have not yet received the attention they may deserve. In addition, a more strate-
gic approach on the selection of practices for specific business services may bet-
ter tap the potential of quality management.
This study shows that quality management for business services is associated
with positive effects such as enhanced service quality resulting in higher custom-
er satisfaction and reduced costs. The positive effects of quality management for
business services seem to exceed the costs of its implementation and mainte-
nance. Buying companies should therefore expand their efforts in quality man-
agement for services.
Buying companies can use our exploratory findings to inform the design of their
quality management for business services. For example, the combination of us-
age, perceived risk, and degree of specification seem to offer a good basis for the
decision on how quality management for services should be designed and how
intense their usage should be. Accordingly, the quality of services transferred to
the end customer, with high risk and a low degree of specification should receive
the highest attention.
144 Quality Management Practices for Business Services
from a Buyer‟s Perspective
The case study also suggests that some buying companies expect their service
providers to actively contribute to quality management, for example, by being re-
sponsible for the collection of quality information or the execution of customer
surveys. This suggests that service providers which regard quality management
of their services as an integral part of their offering may have better chances of
being selected by buying companies.
B.6.2 Theoretical implications
Our analysis provides several theoretical insights into the quality management for
business services from a buying company‟s perspective.
First, it supports earlier research in the area of purchasing of services concluding that
purchasers perceive services more difficult to buy than goods (Axelsson & Wynstra,
2002; Jackson et al., 1995). Thus, existing purchasing practices for goods may not be
directly applicable to services (van der Valk & Rozemeijer, 2009; Wittreich, 1966).
This is particularly true for quality management for business services as our empirical
findings show that purchasers regard the relative low degree of service specification
and the resulting subjective evaluations of service quality as especially difficult to
handle. These complexities exacerbate the transfer of perspectives on goods quality
directly to service quality. In particular, the product-based view which regards quality
as a measurable existence of a product attribute and the manufacturing-based perspec-
tive which defines quality as conformance to specifications (Garvin, 1984; Hardie &
Walsh, 1994) is more problematic to establish in buying companies. Rather, it may be
more appropriate to evaluate service quality along the lines of the transcendental per-
spective which puts quality on a level with excellence and highest standards, the user-
based point of view which equalizes quality with satisfying the wants of a customers,
or the value-based stance in which quality is the result of an evaluation process by the
customer on basis of value considerations (Garvin, 1984; Hardie & Walsh, 1994).
Second, the study supports previous research establishing positive relationships be-
tween the usage of quality management practices for goods and firm performance. The
link between quality management and enhanced service quality resulting in increased
satisfaction of internal or external customers was perceived as strong. The relation be-
tween quality management and the reduction of costs was seen as weaker but still ex-
isting. Overall, quality management for services was associated with creating value to
the company. By contrast, the suggested effects of quality management via the market
Quality Management Practices for Business Services from a Buyer‟s Perspective
145
route by which improvements of the quality of goods finally lead to higher sales could
not be detected by the study (see, for example, Deming, 1982; Garvin, 1984; Garvin,
1988; Molina-Azorín et al., 2009; Sousa & Voss, 2002; White, 1996). However, it has
to be stressed that only few companies undertook efforts to actually measure these ef-
fects. In most cases these results were perceived by interviewees. Further research may
address the issue of measurability of such effects in more detail.
Third, the study shed light on the question what determines the design of quality man-
agement for business services by buying companies. Whereas previous research on
quality management suggests that differences in the adoption of these practices exist
between manufacturing and service companies (Benson et al., 1991; Quazi et al., 1998;
Singh et al., 2006), this study could not discover major distinctions between industries.
Rather, manufacturing and service companies seemed to design the comparably few
practices they used for services in a similar way. It has to be stressed, however, that
the case study methodology did not allow examining the question how widespread the
usage of quality management practices for business services is in manufacturing and
service environments. Therefore, as suggested by the literature, more companies from
manufacturing might still use quality management for externally sourced services than
service companies. Again, this issue should be subject to further research.
The study could, however, identify some other major determinants of quality man-
agement. Most notably, the usage of the service by the buying company, perceived risk
of quality failures, and degree of specification were regarded as major influencers. The
determinant „usage‟ is in line with recent research on purchasing of services (Wynstra
et al., 2006; van der Valk et al., 2009). Previous research on service purchasing also
suggests that risk and degree of specification are major perceived differences between
purchasing of goods and services (Jackson et al., 1995; West, 1997; Mitchell, 1994).
B.6.3 Future research
Many of our findings make a first contribution to a better understanding of quality
management for business services by buying companies while other would benefit
from further research. For example, the question how widespread the usage of quality
management practices in different industries is could be further investigated by survey
research. Quantitative methods could also help to achieve some degree of generaliza-
bility regarding our results on the effects of quality management. So far, for example,
no connection between quality management or service quality and increased sales
146 Quality Management Practices for Business Services
from a Buyer‟s Perspective
numbers for services which are transferred to the end customer could be identified.
This may change if the sample contains more services which are transferred to the end
customer.
Furthermore, our data collection only relates to one side of the buyer-supplier dyad.
We tried to include the supplier‟s position by collecting data on the supplier rather
than from the provider. However, our study shows that service quality is to a signifi-
cant part defined during the service design for which the provider was seen as more
knowledgeable. Therefore, future studies should include data from the supplier in or-
der to examine how the service provider contributes to successful quality management.
We are confident that our study presents a useful starting point for further research into
quality management for business services from a buying company‟s perspective.
Acknowledgements
The authors thank the anonymous reviewers for their helpful comments, which were a
great support in our attempts to significantly enhance previous versions of the manu-
script.
Quality Management Practices for Business Services from a Buyer‟s Perspective
147
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Appendices of paper B
Table B- 1: Quality management practices
Quality man-
agement prac-
tice
Description Potential techniques Selected literature
Quality infor-
mation
Adequate, accurate, and timely
visibility of defect rates, compli-ance to specifications, adherence to schedules etc.
Quality data and reporting,
availability of quality data, graphical depictions of data (e.g. flow-charts, histograms etc.)
Ahire et al. (1995); Dean & Bowen (1995); Evans & Lindsay (2002); Flynn
et al. (1994); Fynes (1999); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Sila & Ebrahimpour (2003); Zu (2009)
Supplier in-volvement
Establishment of long-term rela-tionships with suppliers and en-hancement of suppliers‟ capabili-ties of meeting the purchasing company‟s requirements
Long-term relationships, applica-tion of vendor assessment, certifi-cation procedures
Ahire et al. (1995); Flynn et al. (1994); Fynes (1999); Hemsworth et al. (2008); Molina-Azorín et al. (2009); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Sila & Ebrahimpour (2003); Zu (2009)
Customer in-volvement
Effective measurement and moni-toring of customers‟ needs, expec-tations and/or satisfaction
Close relationships, feedback mechanisms, customer satisfaction orientation
Ahire et al. (1995); Dean & Bowen (1995); Flynn et al. (1994); Fynes (1999); Molina-Azorín et al. (2009); Powell (1995); Sila & Ebrahimpour (2003); Zu (2009)
Process man-agement
Cross-departmental process analy-sis and improvement
Process and role definitions, clean-liness and efficient organization of the workplace, statistical process control
Ahire et al. (1995); Dean & Bowen (1995); Flynn et al. (1994); Molina-Azorín et al. (2009); Powell (1995); Saraph et al. (1989); Sila & Ebrahim-pour (2003); Zu (2009)
Workforce management
Recognition of employee perfor-mance on quality and encourage-ment team dynamics
Commitment to training, employee involvement, recognition and re-ward systems, quality circles
Ahire et al. (1995); Dean & Bowen (1995); Flynn et al. (1994); Fynes (1999); Hemsworth et al. (2008); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Sila & Ebrahimpour (2003); Tawfik Madi (2009); Zu (2009)
Product and/or service design
Reviews of products and services before production and the design of products or services with respect to quality
Cross-functional project teams, Joint product development, design reviews
Ahire et al. (1995); Flynn et al. (1994); Fynes (1999); Saraph et al. (1989); Sila & Ebrahimpour (2003); Zu (2009)
Top manage-ment support
Actions and behaviors of senior management which show com-mitment to quality
Top management involvement, setting clear quality objectives, encouragement of employee in-volvement into activities for quality
improvement
Ahire et al. (1995); Dean & Bowen (1995); Flynn et al. (1994); Fynes (1999); Hemsworth et al. (2008); Molina-Azorín et al. (2009); Powell (1995); Sánchez-Rodríguez & Martínez-Lorente (2004); Saraph et al. (1989); Sila & Ebrahimpour (2003); Zu (2009)
Quality Management Practices for Business Services from a Buyer‟s Perspective
156
Table B- 2: Overview of business services in scope
No. Business services in scope of
paper (in alphabetical order)
Examples of business services in scope of
this paper
Axelsson & Wynstra
(2002)
CAPS Research (2003) BME (2005b)
1 Computer installation and maintenance services
Hardware and software implementation, cus-tomization, maintenance on single user level, telecommunication services
Information Computer hardware, software
IT services
2 Facility services Cleaning, catering, security, real estate mainte-
nance
Real estate, rental and
leasing
Facilities maintenance Facility management
3 Financial services Banking, finance, insurance Finance and insurance Insurance Financial services
4 Professional services Management consultancy, software develop-ment and implementation on company or unit level, accounting and auditing, legal, architects
Professional, scientific and technical; management of compa-nies and enterprises
Consulting Consulting; patent and legal services; purchasing services
5 Research and development services
Development, engineering Professional, scientific and technical
Engineering and manu-facturing equipment
Research and develop-ment
6 Technical maintenance and repair services
Maintenance and repair of production equip-ment
Administrative, support, and waste management
Industrial supply Industrial maintenance
7 Transportation and distribution
services
Warehousing, value-added logistics, transport Transportation and wa-
rehousing
Logistics freight Logistics services
8 Fleet management services Provision of vehicles for transportation of staff or goods
Not included Fleet (executive, non-executive)
Fleet management
9 Human resource services Training, recruitment Not included Employee benefits Human resource services 10 Marketing services Campaign development, production, print ser-
vices
Not included Marketing; printing Marketing services
11 Travel management services Organisation and booking of business travels Accomodation and food services
Total Travel Travel management
Quality Management Practices for Business Services from a Buyer‟s Perspective
157
Table B- 3: Selected companies and their key characteristics
Company
label
Type of
industry
Main product or
service
Turnover category
in m Euro1
Number of employees2 Purchasing volume
in m Euro3
Share of services on
purchasing volume in %3
M1 Manufacturing Agricultural machinery
1,000 – 4,999 ≥5,000 1,000 – 4,999 18
M2 Manufacturing Food ≥5,000 ≥5,000 250 – 999 19
M3 Manufacturing Machine tools 1,000 – 4,999 1,000 – 4,999 250 – 999 20 M4 Manufacturing Electronics 1,000 – 4,999 ≥5,000 Not provided Not provided
M5 Manufacturing Home appliances 1,000 – 4,999 ≥5,000 1,000 – 999 38
M6 Manufacturing Bearings ≥5,000 ≥5,000 Not provided Not provided M7 Manufacturing Food 1,000 – 4,999 1,000 – 4,999 Not provided Not provided
M8 Manufacturing Electronics 1,000 – 4,999 ≥5,000 1,000 – 4,999 27 S1 Services Consultancy ≥5,000 ≥5,000 50 – 249 76
S2 Services Banking ≥5,000 1,000 – 4,999 250 - 999 80
S3 Services Insurance 1,000 – 4,999 ≥5,000 50 – 249 66 S4 Services Banking ≥5,000 ≥5,000 Not provided Not provided
S5 Services Insurance 1,000 – 4,999 1,000 – 4,999 50 – 249 Not provided S6 Services Insurance 1,000 – 4,999 1,000 – 4,999 10 – 49 Not provided
S7 Services Telecommunication 250 – 999 250 – 999 Not provided Not provided S8 Services Insurance ≥5,000 ≥5,000 50 – 249 Not provided
Key:
1 = The turnover category is given in order to guarantee anonymity. For banks the yearly balance sheet total and for insurances the net premiums earned are indicated.
2 = The category for the number of employees is given in order to guarantee anonymity.
3 = Estimated by head of purchasing
Quality Management Practices for Business Services from a Buyer‟s Perspective
158
Table B- 4: Selected services and list of interviewees
Company
label
Selected service Interviewees
Head of
purchasing Purchaser
Quality
manager
Head of operating
department
M1 Human resource services 1 Professional services 1 1
Transportation and distribution services 1 1 M2 Marketing services 1
M3 Fleet management 1 1
M4 Technical maintenance and repair 1
M5 Computer installation and maintenance services 1
Facility services 1 1 M6 Technical maintenance and repair 1 1
M7 Technical maintenance and repair 1
M8 Technical maintenance and repair 1 S1 Human resource services 1
S2 Marketing services 1 S3 Facility services 1 1
S4 Professional services 1
S5 Fleet management 1
Professional services 1 1
S6 Fleet management 1 Marketing services
S7 Transportation and distribution services 1 Technical maintenance and repair 1
S8 Transportation and distribution services 1 1
Marketing services 1 1
Quality Management Practices for Business Services from a Buyer‟s Perspective
159
Table B- 5: Interview protocol (shortened version)
Interview
section
Question module Examples of questions
1 General company and demographic data and selection of business service
How much turnover does your company achieve?
How many employees does your company employ?
What is your current position within your company?
How long do you occupy this position already?
How many years of work experience do you have in total?
Does your company mainly provide products or services?
Please choose a service from the list for which you think you have some sort of quality management in place?
What is the purchasing volume of this service in your company?
… 2 Design of quality
management Which quality information is available for this service?
Please describe if a supplier and service evaluation system exists and how it works?
How do you involve customers into the quality management for
this service?
… 3 Effects of quality
management How do you think did the above mentioned practices of quality
management affect the quality of the selected service?
How do you think the service quality would have developed without you taking the above mentioned quality management
practices?
How do you think did the changed quality of this service affect operating costs, productivity, employee satisfaction, customer complaints
… 4 Determinants of quality
management How do you think does the usage of the service by your company
affect the quality management?
In what way would the quality management differ if the selected service would be used differently by your company?
Which major determinant factors have caused you to design the
quality management for this service as you did
…
160 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Table B- 6: Major findings regarding the design of quality management practices for externally
sourced business services
Quality
management
practice
Major findings
Quality information
Occasional complaints by internal or external service users are a major source of quality information.
Pre-defined KPIs are used as quality information (at M1 for professional services, M3
for fleet management service, M5 for facility services, M8 for technical maintenance and repair services, S1 for human resource services, S3 for facility services, S7 for transportation and distribution services).
Results of KPIs are only seldomly tied to payment (at M1, M3, S3).
Purchasing and operating department are the main recipients of quality information (at M1, M5, M8, S3, S7).
Supplier involvement
All case companies strive for long-term relationships with service providers. The reduction of the number of providers is seen as a necessary prerequisite.
A system of provider evaluation is used at M1, M4, M6, M7, S1, S2, S4, S5.
Differences exist between companies regarding the adjustment of the evaluation to the
service specifics.
Some case companies couple the results of provider evaluation to standardized actions (M4, M6, M7, S2, S4).
Results of provider evaluation only tied to payment at M4.
Audits are only used during provider selection and do not reach the same degree of sophistication as audits for goods suppliers.
Customer involvement
Purchasing regards the internal operating department as main customer. Regular and structured interactions between purchasing and internal or external service users are rare (exceptions: S4 and S5).
Internal service users are not surveyed regarding their satisfaction with the quality of the
externally sourced service (exception: S3).
External service users are surveyed regarding their satisfaction with service quality at M8, S1, S7 (for fleet management services), S5 as part of a larger customer satisfaction
survey. Process management
Service receipt notes confirming the general service provision are used as main method of inspection (at M1, M4, M5, M6, M7, S1, S2, S4).
No sampling techniques are used. Workforce
management No trainings focusing on aspects of service quality are offered.
No targets are set regarding the quality of externally sourced business services.
Quality circles are only used at companies where these were implemented during improvement programs for production processes (at M4, M6).
Service design Services are in most companies purchased by cross-functional teams consisting of purchasers and representatives from the requesting department but no internal or
external service users.
Integration of service providers into the service design phase is dependent on the degree of service specification.
No structured design review process is in place but several companies use testing phases
for externally sourced business services (M1, S5, M5, M7, S3) Management support
With the exception of M5, discussion of quality of externally sourced business services
is limited to complaints.
No targets are set regarding quality of externally sourced business services by top management.
Quality Management Practices for Business Services from a Buyer‟s Perspective
161
C Comparison of quality management for externally
sourced business services
Publication information
The third paper was submitted to the International Journal of
Quality & Reliability Management:
Holschbach, E., Comparison of quality management for externally sourced business
services. International Journal of Quality & Reliability Management: Submitted.
Abstract
Purpose: The aim of this paper is to investigate to which extent buying companies use
quality management (QM) practices for their externally sourced business services (BS)
and if differences between manufacturing and service as well as between large and
small companies exist regarding their usage and effects.
Design/methodology/approach: The researchers collected data from a total of 252
companies using an online survey. Significant differences in the data were identified
using the Mann-Whitney-U test.
Findings: The results show that significant differences exist in the adoption of QM
practices for services and their effects on performance between manufacturing and
service as well as large and small companies. Only minor differences could be detect-
ed, however, regarding barriers to QM implementation and its determinants.
Research limitations/implications: The findings cast doubt on the notion of universal
applicability of QM and suggest taking contextual factors into account when examin-
ing QM.
Practical implications: The study indicates that QM for externally sourced BSs can
have positive effects on the performance of the buying company. In contrast to QM for
goods, manufacturers can learn from service providers in order to improve their QM
for services.
Originality/value: This study fills a theoretical gap as previous literature has predom-
inantly adopted the perspective of a goods or service provider and did not specifically
address quality management for externally sourced services. The findings provide
more insights into how manufacturing, service, large and small companies implement
162 Quality Management Practices for Business Services
from a Buyer‟s Perspective
QM for externally purchased services. The results imply that the implementation of
QM for these services without adjusting to contingent factors is fraught with risk.
Keywords: Quality management; services; contingency theory; manufacturing indus-
try; service industry
Paper type: Research paper
C.1 Introduction
Nowadays, services represent a significant share of the purchasing volume of most
companies (Axelsson and Wynstra, 2002; Jackson et al., 1995; OECD, 2000; Schnei-
der and White, 2004). Some authors estimate that externally purchased services on a
weighted average account for more than half of a company‟s total spend (Fearon and
Bales, 1995). More recent studies suggest that the ratio of business services (BS) to
total purchasing volume lies between 15 and 28% for manufacturing companies
(BME, 2005: 5; Centre for Management Development, 2005). The share of these busi-
ness-to-business (B2B) services on the total purchasing volume may even increase in
the future due to a continuous trend towards concentration on core competencies and
resulting outsourcing (Cox et al., 2005; Ellram et al., 2007; Fuller, 1998; Krause et al.,
2000; Miettinen et al., 2005; Murray and Kotabe, 1999; Smeltzer and Ogden, 2002;
van der Valk and Rozemeijer, 2009). Furthermore, the share of services on many
product offerings is increasing due to a risen demand for augmented core goods
(Gebauer et al., 2010; Grönroos and Helle, 2010; Neu and Brown, 2005; Nilsson et al.,
2001; Wise and Baumgartner, 1999).
Despite the growing significance of BS for industrial customers, quality management
(QM) of externally purchased BS from the perspective of a buying company, i.e. the
professional customer of BS, has received little attention so far by academics (Hems-
worth et al., 2008; Hemsworth et al., 2005; Sánchez-Rodríguez and Martínez-Lorente,
2004). Accordingly, the literature on QM predominantly has adopted the viewpoint of
a provider of goods or services, and tried to answer the question how sellers can im-
prove the quality of the products or services offered to their consumers (Forker, 1997;
Fynes and Voss, 2002; Flynn et al., 1994; Haynes and DuVall, 1993; Rönnbäck and
Witell, 2008). However, research on the question how companies receiving goods or
services manage their quality is scarce (Forker et al., 1997; Fynes, 1999; Fynes and
Voss, 2002; Molina-Azorín et al., 2009; Stanley and Wisner, 2001). The relative dis-
regard of QM from a buyer‟s perspective is surprising as the quality of a company‟s
Quality Management Practices for Business Services from a Buyer‟s Perspective
163
output is highly dependent on the quality of its input (Forker, 1997; Forker et al.,
1997; Krause et al., 2001; Yang et al., 2009).
Therefore, this study wants to shed more light on the overall research questions to
which extent buying companies use QM practices for their externally sourced BS as
well as what the effects, barriers and determinants of QM for these services are. Fol-
lowing a call by Sousa and Voss (2008) this research also intends to analyze if differ-
ences between manufacturing and service as well as between large and small compa-
nies exist regarding their QM for externally sourced BS. In doing so, it examines the
effect of contingent factors on the adoption of QM practices.
This paper wants to contribute to service management research by taking the perspec-
tive of buying companies. In particular, it strives to contribute to theory in the area of
QM by examining QM practices from the perspective of a customer in a B2B envi-
ronment instead of a vendor and by focussing on QM practices for externally sourced
BS. Furthermore, it wants to test for differences in their usage caused by contingent
factors such as industry and organizational size.
The remainder of this article is divided into five sections: After these introductory re-
marks, the second section provides the theoretical background by reviewing related
literature. The third section introduces the hypotheses, the data collection procedure,
the sample and data analysis methods. Afterwards, the results are presented and dis-
cussed in the fourth section. Finally, the managerial and theoretical implications are
outlined and future areas of further research are proposed in the fifth section.
C.2 Theoretical background
This section shortly introduces the cornerstones of contingency theory and the status of
its application in research on QM. Furthermore, it briefly presents results of empirical
studies on the effects of the type of industry and organizational size on the adoption of
QM practices.
C.2.1 Contingency theory and research on QM
Contingency theory posits that an organization must be aligned with the degree of un-
certainty in its environment to achieve optimal performance (Lawrence and Lorsch,
1969; Neu and Brown, 2005; Patterson, 2000; Thomson, 1967). This concept of “fit”
underlies the contingency perspective (Das et al., 2000) and can be understood as a
164 Quality Management Practices for Business Services
from a Buyer‟s Perspective
functional relationship between environmental, management and performance varia-
bles (Luthans and Steward, 1977; Venkatraman, 1989). The theory suggests that or-
ganizations which can establish a fit between organizational structure and environmen-
tal factors will achieve higher organizational performance, while a misfit would have
detrimental effects on it (Donaldson, 2001; Sila, 2007). However, there is not one uni-
versal way of establishing organizational fit (Storey and Hulland, 2010). By contrast,
the best way to organize depends on the nature of the environment to which the organ-
ization relates (Galbraith, 1973; Scott, 2003).
Earlier research on QM (for example, Crosby, 1979; Deming, 1986; Flynn et al., 1995;
Hendricks and Singhal, 1997; Juran and Blanton Godfrey, 2000) suggested that QM
principles and practices are universally applicable. This view was contended, however,
by other researchers arguing that the usage and the design of QM practices could in
fact be dependent on the context (for example, Ahire and Golhar, 1996; Dean and
Bowen, 1995; Ghobadian and Gallear, 1997; Sila, 2007). The environment of a com-
pany using QM may therefore render certain practices of QM inappropriate (Sila,
2007). Reports on failures in implementing QM seem to corroborate this view (Shin et
al., 1998; Sila, 2007). Many of the disappointments with the implementation of QM
seem to be related to the neglect of organizational context, in particular, the firm‟s
size, the nature of its products and industry characteristics (Ahire and Golhar, 1996).
However, research taking the environmental factors of companies using QM into ac-
count is still scarce (Ghobadian and Gallear, 1997; Gustafsson et al., 2003; Hendricks
and Singhal, 2001; Sila, 2007). Thus, Sousa and Voss (2008) called for more empirical
research on QM which incorporates contingent factors such as organizational size and
industry as these can be considered most influential on the usage of QM practices. Ex-
isting research examining the effects of industry and company size on QM is shortly
reviewed in the following.
C.2.2 QM in manufacturing and service companies
Most empirical research on QM has been conducted in the manufacturing sector
whereas studies on service firms have been sparse (Gustafsson et al., 2003; Haynes
and DuVall, 1993; Nilsson et al., 2001; Prajogo, 2005; Raju and Lonial, 2001;
Rönnbäck and Witell, 2008; Sharma and Gadenne, 2002; Singh et al., 2006). Although
more recently this view is contested (Lovelock and Gummesson, 2004; Vargo and
Lusch, 2004), many authors agree that services possess several characteristics which
differentiate them from goods (Schneider and White, 2004; Prajogo, 2005; Svensson,
Quality Management Practices for Business Services from a Buyer‟s Perspective
165
2006). Among these are their heterogeneity, intangibility and inseparability of produc-
tion and consumption (Parasuraman and Varadarajan, 1988; Parasuraman et al., 1985)
as well as the fact that service production normally, but not necessarily always, in-
volves some interaction between customer and provider (Grönroos, 2007; Prajogo,
2005). These differences may cause variations in the adoption of QM between manu-
facturing and service companies (Rönnbäck and Witell, 2008; Woon, 2000). For ex-
ample, intangibility hampers the evaluation and comparison of BS as a customer can-
not see, hear, feel, smell or taste them (Jackson and Cooper, 1988). In addition, insepa-
rability means that the services do not yet exist when the buying company purchases it.
This stresses the need for clarifying the content of the service as requested by the cus-
tomer and suggests that QM of externally sourced BS may already start before the pur-
chase contract is signed (Schneider and Bowen, 1995).
So far, only little research has examined how the type of industry may influence the
design and adoption of QM (Lagrosen and Lagrosen, 2003; Powell, 1995; Rönnbäck
and Witell, 2008). Some of the existing empirical studies are depicted in Table C- 1
(for a comprehensive review please refer to Rönnbäck and Witell, 2008). As can be
seen from Table C- 1, most authors detected differences in the adoption of QM prac-
tices between manufacturing and service companies with manufacturing companies
using more of the QM practices or more intensively (Beaumont et al., 1997; Huq and
Stolen, 1998; Lagrosen and Lagrosen, 2003; Quazi et al., 1998; Sharma and Gadenne,
2002; Solis et al., 1998). By contrast, Woon (2000) and Singh et al. (2006) in the In-
ternational Journal of Quality & Reliability Management did not identify significant
variation in the overall total quality management (TQM) and ISO 9000 implementa-
tion levels in manufacturing and service organizations. Regarding the effects of QM
on organizational performance, some studies suggest that manufacturing companies
can achieve higher levels of improvements by implementing QM than service compa-
nies (Lagrosen and Lagrosen, 2003; Solis et al., 1998). However, other studies did not
detect significant differences in the level of effects achieved by QM in manufacturing
and service companies (Prajogo, 2005) or present a more diverse picture by indicating
that manufacturing and service companies can reach similar levels of performance
gains but on different performance categories (Nilsson et al., 2001; Powell, 1995;
Sharma and Gadenne, 2002; Singh et al., 2006). For example, Powell (1995) points
out that the performance gains of manufacturers did not exceed those of service com-
panies in his study as they did not surpass them in the more intangible practices of
QM. Furthermore, Beaumont et al. (1997) and Singh et al. (2006) found out that the
166 Quality Management Practices for Business Services
from a Buyer‟s Perspective
barriers for the implementation of QM are the same for manufacturing and service
companies with employee resistance, lack of management commitment and under-
standing being the most prevalent ones.
Based on the results presented above, one can assume that differences in the adoption
of QM for externally sourced BS may exist between buying companies in manufactur-
ing and service industries. Most of the existing research suggests that manufacturing
companies implemented more comprehensive sets of QM practices. However, this
finding may not be replicated in our study due to its focus on BS. Service companies
might be more adept in using QM practices for purchased services than manufacturers
as they may possess more experience in managing the quality of the services they de-
liver to their customers.
C.2.3 QM in small and large companies
Concepts of QM were first developed and implemented by large Japanese and subse-
quently adopted by large US organizations (Powell, 1995; Sila, 2007). Much of the
academic literature has therefore examined the usage of QM practices in large corpora-
tions (Ghobadian and Gallear, 1997). Similarly, most research on purchasing is “from
and for large companies” (Mudambi and Schründer, 1996: 122) and does not provide
much insight onto which purchasing practices small companies may use (Ellegaard,
2009). However, most researchers acknowledge that there are fundamental differences
between small and large firms (Coviello et al., 2006; Mintzberg, 1980). On the one
hand, small companies are, for example, considered to possess the advantage of being
more flexible, closer to customers, less formalized and specialized than large firms
(Ghobadian and Gallear, 1997; Haksever, 1996; Hewitt, 1997; Sila, 2007; Sun and
Cheng, 2002). On the other hand, they face severe disadvantages in comparison to
large firms such as lack of capital and skilled staff, little bargaining power towards
suppliers and customers, insufficient budgets for training and the pressure to follow
short-term objectives (Davig et al., 2003; Ghobadian and Gallear, 1997; Fening et al.,
2008; Haksever, 1996; Hewitt, 1997). These discrepancies suggest that the implemen-
tation of QM practices varies between large and small firms. However, research on
whether small and large firms implement QM differently is scarce and existing studies
provide distinct results (Ahire and Golhar, 1996; Gustafsson et al., 2003; Chapman
and Sloan, 1999; Hendricks and Singhal, 2001; Sila, 2007).
Quality Management Practices for Business Services from a Buyer‟s Perspective
167
Table C- 2 provides an overview of selected empirical studies investigating QM adop-
tion in large and small companies. The research presented provides varying results on
the question what motivates small and large companies to implement QM practices.
While Sun and Cheng (2002) discovered that large companies mainly implement QM
practices due to corporate decision, company survival, and to reduce costs the main
goal of small companies in the realization of QM is to meet customer requirements
(Sun and Cheng, 2002). By contrast, Chapman and Sloan (1999) did not detect vari-
ances in the motivation for implementing continuous improvement practices between
large and small firms. Furthermore, most authors (Ahire and Golhar, 1996; Chapman
and Sloan, 1999; Davig et al., 2003; Ghobadian and Gallear, 1997; Mohrman et al.,
1995; Sun and Cheng, 2002) identified differences in the adoption of QM practices
between large and small companies. However, the results presented by Sila (2007) and
Gustafsson et al. (2003) do not provide support for the assumption that smaller com-
panies adopt QM practices in a different way than large ones. Finally, Sila (2007) did
not identify varying effects of QM on organizational performance in large and small
companies, while other authors posit that outcomes differ (Hendricks and Singhal,
2001; Sun and Cheng, 2002). It has to be noted, however, that the latter ones provide
contradicting study results. While Hendricks and Singhal (2001) concluded that the
positive change of operating income after implementing QM is higher for small com-
panies, Sun and Cheng (2002) inferred that QM contributes less to business results in
small than in large firms.
The results of previous research thus draw a diverse picture regarding the motivation
for as well as the adoption and effect of QM in small and large companies. The present
study will therefore include an investigation of potential differences between small and
large firms regarding their QM for externally sourced BS.
Quality Management Practices for Business Services from a Buyer‟s Perspective
168
Table C- 1: Selected empirical studies comparing QM in manufacturing and service companies
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
manufacturing
and service
companies
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation, barriers and
future plans related to QM
Beaumont et al. (1997)
261 manufacturing
companies, 105 service companies
Chi-square, non-parametric tests /
companies / Australia / subjective
Not mentioned Manufacturing companies score significantly higher than
service companies on an aggregate measure of TQM.
No relationship between QM and business performance for
manufacturing or service companies.
Barriers to QM: No significant difference
between manufacturing and service companies. Lack of understanding by managers, resistance by managers/ supervisors and employees are the three main
impediments to the adoption of quality practices.
Huq & Stolen
(1998)
18 manufacturing
companies, 18 service companies
Chi-square / Companies /
US / subjective
Manufacturing = producing
tangible products / service = producing intangible products
Manufacturing companies score significantly higher than
service companies on the adoption of ten out of 19 QM practices. Manufacturers favor scientific, structured QM practices while service companies focus on human
interactions and processes for QM implementation.
- -
Lagrosen &
Lagrosen (2003)
197
manufacturing companies, 54 private service companies, 26 public
service organizations
ANOVA, t-tests /
companies / Sweden / subjective
Assignment to
manufacturing or service sector by respondents
Manufacturing companies
score significantly higher than service companies on an aggregate measure of QM.
Manufacturing companies
experienced improvements in their processes after implementing QM while service companies have not detected positive effects.
-
Nilsson et al. 360 Structural equation According to - Process orientation has a -
Quality Management Practices for Business Services from a Buyer‟s Perspective
169
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
manufacturing
and service
companies
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation, barriers and
future plans related to QM
(2001) manufacturing companies, 122 service
companies
modelling, t-tests / companies / Sweden /
subjective and objective
NACE classification
greater positive impact on customer satisfaction for service companies than for
manufacturing companies. Employee management has a greater positive impact on business results for service companies than for manufacturing companies.
However, customer orientation has a greater positive impact on customer satisfaction for manufacturing companies than for service organizations.
Prajogo (2005)
103 manufacturing companies,
91 service companies
Structural equation modeling and MANOVA /
plants / Australia / subjective
Manufacturing includes sectors such as food and
beverage, textiles, chemical, basic and fabricated metal products etc. Service
sectors include construction, consulting, health care etc.
With the exception of people management (for which service companies score
significantly higher) no significant difference between manufacturing and service companies.
No significant difference in terms of the relationship between QM practices and
quality performance between manufacturing and service companies.
-
Parasuraman & Varadarajan (1988)
35 manufacturing companies, 39 service companies
t-tests / companies / US / subjective
Manufacturers = tangible dominant / service = intangible
- - Future plans: Service companies want to put more effort on human resource strategies than manufacturing ones.
Quality Management Practices for Business Services from a Buyer‟s Perspective
170
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
manufacturing
and service
companies
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation, barriers and
future plans related to QM
dominant
Powell (1995)
24 manufacturing, 15 service companies
Correlation analysis / companies / US / subjective
Not mentioned Supplier relationships are stronger correlated with performance for manufacturing companies whereas process
improvements are more important for service companies.
No significant difference in the level of benefits achieved by implementing QM between manufacturing and service companies. The
performance gains by manufacturers did not exceed those of service firms because the manufacturers did not surpass them in the intangible areas most responsible for
TQM performance.
-
Quazi et al. (1998)
13 manufacturing companies,
20 service companies
Correlation and multiple regression analysis /
companies / Singapore / subjective
Not mentioned Manufacturing companies score significantly higher than service companies on all QM
practices except on specificity of quality goals within the division.
- -
Sharma & Gadenne (2002)
62 manufacturing companies, 58 service companies, 20
construction companies
Factor analysis, MANOVA / companies / Australia / subjective and objective
Not mentioned Manufacturing companies make more use of customer liaison and open organisation QM practices than service or construction companies. Value chain integration is,
however, employed by all industries to the same level.
Adoption of QM leads to higher (subjective) firm performance in manufacturing companies but does not have effects on (the objective measure of) return
on total assets (ROA). In service companies, the adoption of QM has positive effects on both types of measures whereas in construction companies no
effect could be detected.
-
Singh et al. 160 Wilcoxon rank- According to No significant differences in Manufacturing and service Motivation for QM:
Quality Management Practices for Business Services from a Buyer‟s Perspective
171
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
manufacturing
and service
companies
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation, barriers and
future plans related to QM
(2006) manufacturing companies, 149 service
companies / companies / Australia / subjective
sum test ANZSIC classification
the adoption of ISO 9000 between manufacturing and service companies on the
aggregated level.
companies significantly differ regarding the types of benefits achieved from the
adoption of ISO 9000.
Manufacturing and service companies have similar motivations for implementing
the ISO 9000 standard. Barriers to QM: Manufacturing and service companies face similar difficulties with
implementation of the ISO 9000 standard.
Solis et al. (1998)
131 manufacturing companies, 109 service companies
t-tests / companies / Taiwan / subjective
Not mentioned Manufacturing companies score significantly higher than service companies on six out of eight QM practices.
Manufacturing companies achieved higher benefits from TQM than service companies.
-
Woon (2000) 129 manufacturing companies, 111 service companies
Correlation analysis, ANOVA, ANCOVA / companies / Singapore /
subjective
According to SIC classification
No significant differences in the adoption of TQM between manufacturing and service companies on the aggregated level.
- -
Quality Management Practices for Business Services from a Buyer‟s Perspective
172
Table C- 2: Selected empirical studies comparing QM in small and large companies
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
small company
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation for QM
Ahire & Golhar
(1996)
275 small companies,
224 large companies
One-tailed t-tests / companies /
US / subjective
Number of employees
< 250
Small companies make more use of customer focus and
statistical process control. Small companies producing high-quality products make more use of employee involvement. Large companies producing
high-quality products are more effective in design QM and statistical process control.
- -
Chapman &
Sloan (1999)
15 small
companies, 78 large companies
Comparison of
means / companies / Australia / subjective
Number of
employees < 200
Differences in the adoption of
CI support mechanisms. Small companies make more use of incentive systems and suggestions schemes whereas large companies make more use of training to support CI.
- No differences in motivation
for implementation of continuous improvement (CI).
Davig et al. (2003)
75 small companies
Frequency distributions / small companies /
US / subjective
Number of employees < 250
Small companies make less use of QM practices than large ones due to the lack of
understanding of TQM by top managers and perceived cost of implementation.
- -
Fening et al.
(2008)
116 small
companies
Regression
analysis / small companies /
Number of
employees < 50
- QM practices have a positive
effect on business results of small companies in Ghana.
-
Quality Management Practices for Business Services from a Buyer‟s Perspective
173
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
small company
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation for QM
Ghana / subjective
Ghobadian & Gallear (1997)
2 small companies, 2 large companies
Case studies / companies / UK / subjective
Micro companies: Number of employees < 10;
Small companies: Number of employees between 10 and 99;
Medium-sized companies: Number of employees between 100 and 499;
Large companies: Number of employees ≥ 500
Small companies make more use of cross-functional integration, management leadership and
communication methods but do not implement recognition schemes. Large companies make more use of training.
- -
Gustafsson et al. (2003)
159 small service companies, 122 large service
companies
Structural equation modelling / companies / Sweden / subjective
Small companies: Number of employees < 50
No difference in the adoption of QM practices between small and large companies.
Customer orientation has a stronger effect on business results in small than in large service companies. Process orientation has a stronger
effect on customer satisfaction in large than in small service companies.
-
Hendricks & Singhal
205 small companies,
ANOVA, ANCOVA, t-
Annual sales below 917
- Small companies obtain better performance results
-
Quality Management Practices for Business Services from a Buyer‟s Perspective
174
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
small company
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation for QM
(2001) 206 large companies
values / companies / US /
objective
million USD (median of sample)
(measured as change of operating income) than large companies when
implementing QM. Martinez-Lorente,
Gallego-Rodriguez, & Dale (1998)
223 companies Correlation analysis /
Companies / Spain / subjective
Companies with more than 700
employees were deleted for analysis
Larger companies adopt QM to a higher degree than small
ones.
- -
Mohrman et
al. (1995)
290 large
companies
Correlation and
regression analysis / companies / US / subjective
Not mentioned Large companies make more
use of only one practice of QM, just-in time deliveries. Otherwise, no effect of company size on adoption of QM practices.
- -
Sila (2007) 102 small companies, 102 medium-
sized companies, 82 large companies
Structural equation modelling / companies /
US / subjective
Small companies: Number of
employees < 100; Medium-sized: Number of employees between 101
and 500; Large: Number of employees > 500
No difference in the adoption of QM practices between small and large companies.
No difference regarding the effects of QM on organizational performance
between small and large companies.
-
Sun & Cheng (2002)
180 small and large companies
Discriminant and canonical correlation
Number of employees < 150
Small companies make more use of leadership, human resource development and
QM contributes less to organizational performance in small than in large
Small companies mainly implement QM due to customer requirement or
Quality Management Practices for Business Services from a Buyer‟s Perspective
175
Study Sample Method of
analysis /
level of analysis /
origin of sample /
subjective or
objective data
Definition of
small company
Major results regarding
adoption of QM
Major results regarding
effects of QM
Major results regarding
motivation for QM
analysis / companies / Norway /
subjective
quality information. QM is more people-oriented and informal. Large companies
make more use of training, customer feedback, social responsibility and citizenship as well as cooperation with suppliers. QM is more structural and process-
oriented.
companies. external market conditions. Large companies mainly implement QM because of
procedural and marketing benefits.
176 Quality Management Practices for Business Services
from a Buyer‟s Perspective
C.3 Research hypotheses and methodology
This section briefly develops the hypotheses based on the literature review and de-
scribes the research methodology.
C.3.1 Research hypotheses
The empirical results of previous research presented above underline the need for this
study. They call for a thorough investigation of differences in the adoption of QM
practices for externally sourced BS by buying companies regarding industry and firm
size. I will investigate these by bringing forward the following hypotheses in their null
form:
H 1: There are no differences in the adoption of QM practices for externally
sourced BS between manufacturing and service as well as between small and
large companies.
H 2: There are no differences in the effects of using QM practices for externally
sourced BS between manufacturing and service as well as between small and
large companies.
H 3: There are no differences regarding the barriers to the implementation of QM
practices for externally sourced BS between manufacturing and service as
well as between small and large companies.
H 4: There are no differences regarding the determinants of QM practices for ex-
ternally sourced BS between manufacturing and service as well as between
small and large companies.
C.3.2 Development of the measurement instrument
I decided to use the survey method as it is more useful in testing hypotheses than, for
example, case studies (Huber and Power, 1985). The survey instrument was developed
in three steps: First, an exploratory, multiple, embedded (Yin, 2003) and comparative
(Dul and Hak, 2008; Silverman, 2002) case study was conducted in order to investi-
gate the broader domain of purchasing of BS by interviewing 32 representatives of 16
Quality Management Practices for Business Services from a Buyer‟s Perspective
177
manufacturing and service companies. Second, a prototype questionnaire was devel-
oped based on the results of the previous case studies and an extensive review of lit-
erature in the areas of QM and service quality. Constructs from earlier research were
used whenever possible. The questionnaire and its subsequent version measured items
on a seven-point Likert scale with end points of “not at all (=1)” to “to the fullest ex-
tent (=7)”. Third, the prototype questionnaire was pre-tested by seven purchasing
managers, six quality managers and four academics from the area of operations man-
agement. Each of these filled out the questionnaire. Afterwards, the pilot study was
statistically tested. The results of the pre-test were discussed with the respondents.
Their feedback and the statistical analysis led to modifications of the wording of some
survey questions. The final items and corresponding constructs are given in
Table C- 4 to 7.
C.3.3 Sample
The final version of the questionnaire was made available online to firms operating in
Austria, Germany and Switzerland. The sample was drawn from two sources: First, a
contact list from the researchers‟ university was used. Second, several contacts were
found by searching the publicly available company databases to avoid potential bias
from convenience sampling (Zhu et al., 2008). In total, I identified 1,977 companies
and contacted them by e-mail. 664 e-mails were undeliverable because contact data
were out of date. This left us with a list of 1,313 usable e-mail addresses. In total, I
received 513 responses. Responses with missing values were excluded from further
analysis. Thus, a sample of 252 complete questionnaires remained resulting in a re-
sponse rate of 19.2%.
As can be seen in Table C- 3, the sample includes companies buying BS from a broad
range of industries. Also, these companies range from small and medium enterprises to
multinational corporations. Most of the responses came from Germany, followed by
Switzerland and Austria. The respondents majorly held positions such as head of pur-
chasing or purchasing manager followed by head of QM, chief executive officer
(CEO) and quality manager. Furthermore, many respondents represented other posi-
tions such as head of supply chain management, head of operations, head of marketing
etc. indicating that they were intensive consumers of BS purchased by their company.
I therefore concluded that the respondents possessed the required knowledge to answer
the questions appropriately.
178 Quality Management Practices for Business Services
from a Buyer‟s Perspective
C.3.4 Data analysis
Data from 7-point Likert scales are ordinal (Barnes et al., 2001) and were in our sam-
ple not normally distributed. I therefore decided to use the non-parametric Mann-
Whitney-U test to examine differences in managerial perceptions. I adopted the Mann-
Whitney-U test on the level of single items and aggregated constructs which are shown
in Table C- 4 to 7 in order to obtain more detailed results. The null hypothesis states
that there is no statistical significant difference between the mean scores of manufac-
turing and service as well as between small and large companies.
The reliability of the constructs was tested by computing Cronbach‟s alpha (Cronbach,
1951). All constructs showed values well above the recommended threshold of 0.7
(Henseler et al., 2009) with the exception of the construct for determinants
(Cronbach‟s alpha of 0.691). Following a recommendation by Nilsson et al. (2001) I
nevertheless retained the construct in the study due to its closeness to the recommend-
ed value and its theoretical importance. The mean values of the constructs were calcu-
lated by dividing the sum of the means values of the items by their quantity. This pro-
cedure is similar to that of Martinez-Lorente et al. (1998) and Powell (1995).
The four independent samples for this test were companies from the manufacturing
and the service sector as well as large and small companies. According to recommen-
dations by the European Commission, the participating companies were assigned to
either the manufacturing or the service sector by their NACE Rev. 2 code. Organiza-
tions from section G to N and P to S in NACE Rev. 2 were assigned to the service sec-
tor while firms from sections A to F and L were defined as manufacturers (European
Commission, 2010b; European Commission, 2010a). Furthermore, large companies
were considered having more than 250 employees (European Commission, 2010c).
Table C- 3: Response sample composition
Response
sample size:
252 responses
Industry
Name of the NACEa group Number of
responses
Percentage
of responses
Manufacturing (C): 100 39.7%
Transportation and storage (H): 46 18.3%
Administrative and support service activities (N):
28 11.1%
Information and communication (J): 15
6.0%
Professional scientific and technical activities (M):
12
4.8%
Financial and insurance activities (K): 11 4.4%
Quality Management Practices for Business Services from a Buyer‟s Perspective
179
Wholesale and retail trade; repair of motor vehicles and motorcycles (G):
11
4.4%
Construction (F): 9 3.6%
Human health and social work activities (Q): 9 3.6%
Electricity, gas, steam and air conditioning supply (D):
5 2.0%
Public administration and defence; compulsory social security (O):
3
1.2%
Education (P): 2 0.8%
Agriculture, forestry and fishing (A) 1 0.4% Total number of manufacturers (NACE code A to F and L) 115 45.6%
Total number of service companies (NACE code G to N and P)
137 54.4%
Number of
employees
per company
Category of number of employees
1-9 employees: 11 4.4%
10-49 employees: 26 10.3% 50-249 employees: 41 16.3%
240-999 employees: 47 18.7% 1,000 – 4,999 employees: 54 21.4%
≥ 5,000 employees: 73 29.0%
Total number of large companies (>250 employees) 174 69.0% Total number of small companies (≤ 250 employees) 78 31.0%
Turnover per
company
Category of turnover
0 < 2 million Euro: 17 6.7%
2 < 10 million Euro: 17 6.7%
10 < 50 million Euro: 36 14.3% 50 < 250 million Euro: 48 19.0%
250 < 1,000 million Euro: 39 15.5% 1,000 < 5,000 million Euro: 41 16.3%
≥ 5,000 million Euro: 44 17.5% Not specified: 10 4.0%
Country of
headquarter
of company
Country
Austria: 11 4.4% Germany: 138 54.8%
Switzerland: 54 21.4% Liechtenstein: 2 0.8%
Other: 6 2.4%
Not specified: 41 16.3% Respondent
titles
Title
Head of purchasing: 65 25.8% Purchaser: 30 11.9%
Head of quality management: 30 11.9% Quality manager: 17 6.7%
CEO: 26 10.3%
Other (Head of supply chain management, head of operations etc.):
84 33.3%
a According to Nomenclature statistique des activités économiques dans la Communauté européenne (NACE
Rev. 2) (European Commission, 2010b).
C.4 Results and discussion
In the following section the result of the quantitative analysis are presented and further
discussed.
180 Quality Management Practices for Business Services
from a Buyer‟s Perspective
C.4.1 Results regarding the adoption of QM practices
Table C- 4 provides a summary of the adoption of QM practices for externally sourced
BS in manufacturing, service, small and large companies. As can be seen, on the level
of the whole population the most intensively used QM practices for externally sourced
BS in descending order of their mean values are service design, workforce manage-
ment, management support, customer involvement, quality information, process and
provider management.
As for the differences between manufacturing and service companies on the level of
constructs, the null hypothesis was rejected for management support and customer in-
volvement indicating significant differences in the adoption of these QM practices be-
tween manufacturing and service companies. Service firms demonstrate more support
by top management for quality issues for externally sourced BS and a more intensive
customer involvement. These results are in contrast to results of earlier studies which
examined the adoption of QM on an aggregate level and concluded that manufacturing
companies score higher than service firms (Beaumont et al., 1997; Lagrosen and Lag-
rosen, 2003) or did not detect any significant differences between industries at all
(Singh et al., 2006; Woon, 2000). Several authors have inferred that manufacturers are
more adept than service providers in the usage of QM practices for outgoing goods or
services (Huq and Stolen, 1998; Quazi et al., 1998; Sharma and Gadenne, 2002; Solis
et al., 1998). When examining the QM for incoming services, however, service com-
panies use the same or even more intense levels of QM practices. A potential explana-
tion might be that they are able to transfer their knowledge and experience from ser-
vices they offer to their customers to the QM for their externally purchased services.
This also means that for certain QM practices manufacturing companies may be able
to learn from service firms in order to improve their QM.
On the level of single items, top management of service companies more often reviews
quality issues of externally sourced services and is more intensively involved in quali-
ty-related activities. Furthermore, it more frequently sets objectives regarding the qual-
ity of externally sourced BS than management of manufacturing firms. In terms of
workforce management, service providers offer more training related to quality of ex-
ternally sourced services and enhance the quality awareness of their employees more
intensively than manufacturers. In addition, service companies are more skilled in in-
volving their internal or external customers into QM for externally sourced BS. In par-
ticular, they more often integrate the requirements and the feedback of their external
customers and analyze their satisfaction regarding the service. The relatively intense
Quality Management Practices for Business Services from a Buyer‟s Perspective
181
adoption of top management support, workforce management and customer involve-
ment may reflect the importance of personal interaction between service providers and
its customers during service production and delivery (Grönroos, 2007). For example, it
may be more important for a service provider than a manufacturer to properly train its
employees regarding the quality of its externally sourced services as these may be-
come part of its own service offering. Furthermore, service providers may possess
more experience in customer involvement as a larger percentage of their employees
are in direct contact with their customers. Service companies in our sample are also
ahead of manufacturers when it comes to quality information in terms of defining the
required level of service quality. They more frequently use key performance indicators
or service level agreements to define their demands and monitor their attainment.
Again, this may be an effect of longer experience in using key performance indicators
and service level agreements for the services they offer to their customers.
By contrast, manufacturers more often involve multiple departments into the service
design than service providers. They also conduct a more intense provider management
requiring their service providers to establish an effective system for measuring quality
and to provide certifications such as ISO 9000, ISO 14001 or SA 8000. This result cor-
responds to the study by Powell (1995). He found out that supplier relationships are
stronger correlated with performance for manufacturing companies than for service
firms. A potential explanation for this may lie in the evolution of QM. Many authors
have argued that QM and related certifications were first adopted by manufacturing
companies (Rönnbäck and Witell, 2008; Sharma and Gadenne, 2002; Singh et al.,
2006). Therefore, they may also possess deeper knowledge regarding supplier in-
volvement which can now be easily transferred to their service providers. This may,
however, represent a threat to the effectiveness of QM practices for externally sourced
BS. For example, if manufacturers use techniques of the involvement of goods suppli-
ers to service providers without adjusting them to the specifics of services, they might
loose some of their impact and efficiency.
Significant differences in the adoption of QM practices for externally sourced BS exist
for provider involvement, quality information, service design and process management
between large and small companies on the construct level. In all these cases, large
companies use the practices to a higher extent than small ones. This contradicts earlier
empirical research by Sila (2007) who did not discover significant differences in the
adoption of QM practices between large and small companies.
182 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Examining the differences on the item level, it becomes clear that larger companies
audit and train their service suppliers more intensively than small firms. Furthermore,
they more often require their service providers to establish a QM system for the ser-
vices they sell and to provide quality-related certifications. As for quality information,
large companies more frequently use benchmarking as well as key performance indi-
cators or service level agreements than small companies. In addition, multiple depart-
ments, internal service customers and the service providers themselves are more often
involved in the service design process in large than in small companies. In terms of
process management, large companies make more use of electronic systems and statis-
tical methods for inspection and assessment of externally sourced BS than small ones.
Furthermore, processes related to the provision of such services are better documented
in large rather than small firms.
Regarding the items related to customer involvement, only one significant difference
was detected related to the feedback on the quality of externally sourced BS given by
internal customers. Large companies receive such information more often than small
ones. In terms of management support and workforce management no significant dif-
ferences between large and small companies were found. These findings may be relat-
ed to the lower degree of formalized structures and hierarchical levels in small firms
(Ghobadian and Gallear, 1997; Hewitt, 1997). Thus, the top management of a small
firm may have to be more involved into the QM for externally sourced services as
there are no specialized departments dealing with it.
Overall, these differences may reflect that large companies possess the required re-
sources in terms of budgets and skilled staff to implement more formal QM practices
such as provider involvement, quality information, service design and process man-
agement. In line with research by Sun (2000) and Ghobadian and Gallear (1997), small
companies in our sample, by contrast, seem to leverage their advantages for the im-
plementation of a more informal and people-oriented QM for externally sourced ser-
vices.
C.4.2 Results regarding the effects of QM practices
Table C- 5 indicates that the survey sample experienced positive effects by using QM
practices for externally sourced BS. Overall, the strongest effects were the increase of
service quality and cost efficiency followed by further effects and raise of customer
satisfaction.
Quality Management Practices for Business Services from a Buyer‟s Perspective
183
On the construct level, service companies scored higher than manufacturers on the ad-
ditional effects associated with QM. Examining the level of the single items, service
companies could increase the satisfaction of their external customers and reduce their
complaint rates related to externally sourced BS to a higher extent than manufacturing
companies. Furthermore, activities related to the QM for externally sourced BS led to
a steeper rise of sales volumes in service than in manufacturing companies. Manufac-
turing companies, by contrast, could lower the purchase prices of externally sourced
BS through QM practices more than service companies. These results are in contrast to
studies by Beaumont et al. (1997), Powell (1995) who did not discover significant dif-
ferences regarding the effects of QM between manufacturing and service companies.
They support, however, authors such as Nilsson et al. (2001) and Singh et al. (2006)
who posited that service companies can achieve more customer satisfaction and in-
crease of sales volumes by implementing QM than manufacturers. A potential reason
for this may be that for service companies externally purchased BS are a more substan-
tial part of their own service offering. Thus, such services may have a more direct ef-
fect on customer satisfaction and sales volume as they are more frequently transferred
to end customers. On the contrary, manufacturers may purchase more services exter-
nally which are not part of their final offer to their customers.
On the construct level, larger companies could achieve significantly higher levels of
customer satisfaction and cost efficiency than small firms by using QM practices for
externally sourced BS. In addition, the overall value of QM for services was perceived
higher in manufacturing and in service firms. Looking at the single items, large com-
panies could achieve a significantly greater increase in satisfaction of internal custom-
ers with the quality of externally sourced BS and a higher reduction of complaints by
external customers. Moreover, larger firms could lower purchase prices of externally
sourced BS, operating costs and the cost for their quality failures to a higher degree
than small firms. Furthermore, larger organizations experienced a stronger increase of
productivity than small ones by the adoption QM practices for externally sourced BS.
In total, these results contrast previous findings by Sila (2007) who detected no differ-
ence regarding the effects of QM on organizational performance between large and
small firms and Hendricks and Singhal (2001) who suggested that small companies
obtain better performance results than large ones by implementing QM. The findings
are in line, however, with Sun and Cheng (2002) who discovered that QM contributes
less to organizational performance in small than in large companies. The reason for the
greater effects of QM in large companies may lie in their higher degree of outsourcing.
184 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Large companies may have outsourced a greater share of their required BS than small
companies. This may mean that externally sourced BS represent a bigger share of a
large company‟s purchasing volume than that of a small one. Therefore, the implemen-
tation of QM practices for such services may also have stronger effects on organiza-
tional performance in large than in small firms.
C.4.3 Results regarding the barriers to the implementation of QM practices
The results relating to the difficulties faced with the implementation of QM practices
for externally sourced BS are summarized in Table C- 6. Overall, the heterogeneity
and the necessity to subjectively evaluate the quality of services were perceived as ma-
jor impediments to successful QM implementation. Neither on the construct nor on the
item level could major differences between manufacturing and service as well as large
and small companies be detected. The only exception was the lack of support by top
management which was more critical for large than for small companies. These results
are in line with the ones by Beaumont et al. (1997) and Singh et al. (2006) who identi-
fied similar barriers to QM and ISO 9000 implementation in manufacturing and ser-
vice firms.
These relative homogeneous values may indicate that barriers in establishing QM for
externally sourced BS are more related to the general characteristics of services which
cannot be influenced by the individual buying company. More specific factors such as
degree of service definition, resistance to change or level of software support and
availability of resources do not seem to represent a major impediment to the realiza-
tion of QM in buying firms. For example, it may be more difficult for a buying com-
pany to set-up a comprehensive system of QM for the complete set of their BS rather
than finding suitable service specifications for a particular service. This may mean that
buying companies need particular support in the creation of a QM for BS which com-
prises many instead of just few of their externally sourced BS.
C.4.4 Results regarding the determinants of QM practices
Table C- 7 presents the results related to the determinants of QM practices for exter-
nally sourced BS. Overall, buying companies focus their QM activities on services
whose quality failure would represent a critical risk, which represent an important
share of their purchasing volume, are important to the production process or trans-
ferred to the buying company‟s customers.
Quality Management Practices for Business Services from a Buyer‟s Perspective
185
On the level of constructs, the determinants of QM for incoming services significantly
differ between large and small companies whereas no difference could be detected
between manufacturing and service firms.
On the level of single items, however, manufacturers more often than service firms
focus their QM activities on services which are important for their production process-
es. Although production processes are performed in manufacturing and service organi-
zations, this result may be due to the widespread understanding that production repre-
sents the core business of manufacturing companies rather than service providers. Ser-
vice firms, by contrast, attach more importance to services which are well specified
than manufacturers. This result may reflect the greater experience of service providers
in the definition and description of services they offer. This knowledge may have been
transferred to the specification of externally sourced services. The impact of externally
sourced BS on the production process, its share in the purchasing volume and the de-
gree of specification were more critical determinants for large than small companies.
A potential explanation for this result may be that small companies have not yet taken
a very structured approach to focusing their QM activities for their externally sourced
BS. Therefore, they may not have analyzed which of these services are important for
their production processes, are well specified or reflect a significant share of their pur-
chasing volume to the same degree as large companies. Rather, they may perform their
QM activities for all of their externally sourced BS alike while large companies put
more focus on the critical ones.
Quality Management Practices for Business Services from a Buyer‟s Perspective
186
,
Table C- 4: Adoption of QM practices for externally sourced BS in manufacturing, service, small and large companies
Constructs
(Cronbach’s alpha)
Items
Population
mean
(std. dev.a)
Mean value
manufacturing companies
(std. dev.a)
Mean value
service companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Management support
(0.931)
4.04
(1.734)
3.76
(1.704)
4.28
(1.729)
6,465/
-2.457 /
0.014
Reject 3.93
(1.718)
4.29
(1.756)
5,980 /
-1.510 /
0.131
Do not reject
Our top management
reviews problems related to the quality of externally sourced business services in
organizational top management meetings.
4.36
(1.855)
4.10
(1.849)
4.58
(1.838)
6,686 /
-2.094 /
0.036
Reject 4.25
(1.801)
4.59
(1.964)
6,007 /
-1.476 /
0.140
Do not reject
Our top management sets
objectives regarding the quality of externally sourced business services.
4.05
(1.860)
3.78
(1.853)
4.28
(1.842)
6,648 /
-2.159 /
0.031
Reject 3.97
(1.862)
4.24
(1.853)
6,226 /
-1.060 /
0.289
Do not reject
Our top management is
personally involved in activities to improve the
quality of externally sourced business services.
3.72
(1.833)
3.39
(1.810)
3.99
(1.813)
6,376 /
-2.640 /
0.008
Reject 3.58
(1.819)
4.03
(1.837)
5,849 /
-1.775 /
0.076
Do not reject
Workforce management
(0.872)
4.40
(1.475)
4.24
(1.472)
4.53
(1.470)
6,795/
-1.880 /
0.060
Do not reject 4.44
(1.435)
4.30
(1.566)
6,535/
-0.470 /
0.639
Do not reject
Training related to quality of services is given to the employees in our company.
3.64
(1.935)
3.12
(1.812)
4.07
(1.935)
5,656 /
-3.906 /
0.000
Reject 3.63
(1.936)
3.67
(1.945)
6,715 /
-0.134 /
0.893
Do not reject
Our company forms teams to
solve problems related to the quality of externally sourced business services.
4.99
(1.712)
5.13
(1.673)
4.88
(1.742)
7,201 /
-1.197 /
0.231
Do not reject 5.11
(1.604)
4.73
(1.918)
6,116 /
-1.276 /
0.202
Do not reject
We give some of our 4.07 3.99 4.14 7,481 / Do not reject 4.16 3.88 6,271 / Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
187
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
employees (for example, purchasers or quality managers) clear objectives regarding the quality of externally sourced business services.
(1.903) (1.922) (1.891) -0.696 /
0.486
(1.851) (2.013) -0.974 /
0.330
Ideas from our employees
are actively used to improve the quality of externally sourced business services.
4.72
(1.748)
4.66
(1.796)
4.77
(1.712)
7,607 /
-0.476 /
0.634
Do not reject 4.78
(1.757)
4.59
(1.732)
6,334 /
-0.858 /
0.391
Do not reject
Our company continually
enhances the awareness of its employees regarding the quality of externally sourced business services.
4.56
(1.765)
4.30
(1.747)
4.77
(1.757)
6,540 /
-2.354 /
0.019
Reject 4.53
(1.759)
4.62
(1.789)
6,586 /
-0.379 /
0.705
Do not reject
Provider involvement
(0.867)
3.70
(1.245)
3.86
(1.320)
3.57
(1.167)
6,885 /
-1.724 /
0.085
Do not reject 3.94
(1.259)
3.17
(1.040)
4,501 /
-4.273 /
0.000
Reject
We strive to establish long-
term relationships with our providers of business services.
5.77
(1.152)
5.78
(1.082)
5.75
(1.211)
7,815 /
-0.114 /
0.909
Do not reject 5.80
(1.107)
5.69
(1.252)
6,552 /
-0.457 /
0.648
Do not reject
Our company has a thorough
rating system for its providers of business services.
4.48
(1.822)
4.49
(1.889)
4.48
(1.770)
7,817 /
-0.107 /
0.915
Do not reject 4.58
(1.822)
4.27
(1.814)
6,119 /
-1.263 /
0.207
Do not reject
The rating of our service
providers is followed by pre-defined measures.
4.24
(1.898)
4.08
(2.001)
4.38
(1.803)
7,178 /
-1.228 /
0.219
Do not reject 4.36
(1.884)
3.97
(1.914)
6,013 /
-1.462 /
0.144
Do not reject
We continually audit our
service providers to make sure we receive quality
3.50
(1.863)
3.65
(1.892)
3.36
(1.835)
7,205 /
-1.183 /
Do not reject 3.71
(1.856)
3.01
(1.798)
5,291 /
-2.833 /
Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
188
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
business services. 0.237 0.005
Our service providers have
an effective system for measuring the quality of the business services they sell us.
4.08
(1.953)
4.44
(1.957)
3.78
(1.905)
6,345 /
-2.687 /
0.007
Reject 4.37
(1.845)
3.44
(2.042)
4,944 /
-3.481 /
0.000
Reject
Our service providers are
involved in our quality training.
2.48
(1.583)
2.51
(1.672)
2.45
(1.510)
7,855 /
-0.040 /
0.968
Do not reject 2.70
(1.674)
2.00
(1.238)
5,227 /
-3.019 /
0.003
Reject
Our service providers are
recognized and rewarded for service quality improvement.
3.04
(1.678)
3.02
(1.665)
3.07
(1.694)
7,747 /
-0.231 /
0.817
Do not reject 3.14
(1.698)
2.83
(1.623)
6,144 /
-1.222 /
0.222
Do not reject
Our service providers have
to produce the ISO 9000 or an equivalent certification
regarding their quality management.
3.86
(2.268)
4.36
(2.181)
3.44
(2.262)
6,057 /
-3.213 /
0.001
Reject 4.25
(2.164)
2.99
(2.265)
4,648 /
-4.066 /
0.000
Reject
Our service providers have
to produce the ISO 14001 or an equivalent certification regarding their environmental management.
3.08
(2.097)
3.56
(2.185)
2.69
(1.939)
6,018 /
-3.323 /
0.001
Reject 3.59
(2.121)
1.96
(1.541)
3,725 /
-5.891 /
0.000
Reject
Our service providers have to produce the SA 8000 or
an equivalent certification regarding their occupational health and safety.
2.48
(1.920)
2.74
(2.022)
2.27
(1.809)
6,759 /
-2.078 /
0.038
Reject 2.90
(2.053)
1.55
(1.124)
4,088 /
-5.399 /
0.000
Reject
Quality information
(0.873)
3.82
(1.416)
3.80
(1.413)
3.84
(1.424)
7,738 /
-0.243 /
0.808
Do not reject 3.95
(1.421)
3.52
(1.370)
5,680 /
-2.070 /
0.038
Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
189
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
In our company, quality data (for example, error rates,
complaint rates etc.) regarding externally sourced business services are available for purchasers.
4.22
(1.942)
4.47
(1.916)
4.01
(1.946)
6,827 /
-1.843 /
0.065
Do not reject 4.29
(1.827)
4.06
(2.182)
6,412 /
-0.707 /
0.480
Do not reject
In our company, quality data
(for example, error rates, complaint rates etc.)
regarding externally sourced business services are available for the internal requisitioner.
4.58
(1.842)
4.68
(1.819)
4.49
(1.863)
7,412 /
-0.819 /
0.413
Do not reject 4.61
(1.775)
4.49
(1.992)
6,618 /
-0.319 /
0.749
Do not reject
We regularly report data
regarding the quality of externally sourced business services.
3.99
(1.946)
4.01
(1.949)
3.97
(1.951)
7,801 /
-0.135 /
0.893
Do not reject 3.97
(1.923)
4.04
(2.009)
6,607 /
-0.339 /
0.734
Do not reject
We exchange data regarding
quality of externally sourced business services with other companies.
2.52
(1.568)
2.38
(1.565)
2.64
(1.567)
7,028 /
-1.525 /
0.127
Do not reject 2.71
(1.672)
2.09
(1.208)
5,458 /
-2.567 /
0.010
Reject
We use data regarding the
quality of externally sourced business service to improve their quality.
4.25
(1.835)
4.37
(1.857)
4.15
(1.817)
7,309 /
-0.999 /
0.318
Do not reject 4.32
(1.789)
4.10
(1.938)
6,358 /
-0.810 /
0.418
Do not reject
We define the required level of service quality by means
of key performance indicators or service level agreements.
3.83
(2.087)
3.48
(2.096)
4.12
(2.042)
6,423 /
-2.552 /
0.011
Reject 4.19
(2.052)
3.03
(1.947)
4,615 /
-4.105 /
0.000
Reject
We benchmark the quality of
our externally sourced
3.35
(1.888)
3.19
(1.877)
3.47
(1.895)
7,168 /
-1.248 /
Do not reject 3.56
(1.922)
2.86
(1.726)
5,373 /
-2.680 /
Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
190
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
business services. 0.212 0.007
Service design
(0.771)
4.43
(1.174)
4.50
(1.064)
4.37
(1.259)
7,616 /
-0.455 /
0.649
Do not reject 4.63
(0.989)
3.97
(1.409)
4,961/
-3.417 /
0.001
Reject
In our company, multiple
departments (such as purchasing, quality
management and internal customers) coordinate in the design process for externally sourced business services.
5.35
(1.742)
5.70
(1.482)
5.06
(1.889)
6,442/
-2.567 /
0.010
Reject 5.71
(1.493)
4.54
(1.978)
4,409 /
-4.579 /
0.000
Reject
Our company actively
involves its internal customers into the design
process for externally sourced business services.
5.29
(1.637)
5.35
(1.590)
5.25
(1.679)
7,701 /
-0.315 /
0.753
Do not reject 5.65
(1.401)
4.50
(1.843)
4,291 /
-4.784 /
0.000
Reject
Our company actively
involves its external customers into the design process for externally sourced business services.
3.57
(1.864)
3.50
(1.832)
3.64
(1.894)
7,567 /
-0.546 /
0.585
Do not reject 3.69
(1.782)
3.31
(2.021)
5,905 /
-1.667 /
0.095
Do not reject
We involve our service providers in the design
process of our externally sourced business services.
4.45
(1.659)
4.55
(1.629)
4.37
(1.685)
7,472 /
-0.716 /
0.474
Do not reject 4.64
(1.502)
4.04
(1.910)
5,615 /
-2.224 /
0.026
Reject
Our specifications for
externally sourced business services are clear.
4.60
(1.577)
4.62
(1.565)
4.59
(1.593)
7,786 /
-0.162 /
0.871
Do not reject 4.72
(1.456)
4.33
(1.799)
5,961 /
-1.570 /
0.117
Do not reject
We thoroughly review new externally sourced business
services before they are used.
3.31
(1.820)
3.30
(1.860)
3.31
(1.793)
7,827 /
-0.090 /
0.928
Do not reject 3.39
(1.766)
3.12
(1.934)
6,059 /
-1.380 /
0.168
Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
191
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Customer involvement
(0.884)
3.99
(1.489)
3.74
(1.440)
4.20
(1.501)
6,372 /
-2.614 /
0.009
Reject 4.07
(1.459)
3.81
(1.546)
6,253/
-0.998 /
0.318
Do not reject
We use the requirements of
our internal customers of externally sourced business services as basis for the definition of their quality.
4.37
(1.720)
4.28
(1.819)
4.45
(1.636)
7,504 /
-0.660 /
0.510
Do not reject 4.46
(1.709)
4.17
(1.739)
6,086 /
-1.330 /
0.183
Do not reject
We use the requirements of
our external customers of externally sourced business services as basis for the definition of their quality.
3.83
(1.973)
3.35
(1.905)
4.23
(1.945)
5,805/
-3.541 /
0.000
Reject 3.82
(1.922)
3.86
(2.093)
6,707 /
-0.076 /
0.939
Do not reject
Our company analyzes the
satisfaction of its internal customers of externally
sourced business services and the results are used for quality improvements.
4.16
(1.765)
4.17
(1.782)
4.16
(1.758)
7,875 /
-0.005 /
0.996
Do not reject 4.29
(1.747)
3.87
(1.783)
5,900 /
-1.680 /
0.093
Do not reject
Our company analyzes the
satisfaction of its external customers of externally sourced business services and the results are used for quality improvements.
3.79
(2.034)
3.33
(1.920)
4.17
(2.053)
5,953 /
-3.178 /
0.001
Reject 3.83
(2.007)
3.71
(2.102)
6,438 /
-0.516 /
0.606
Do not reject
Our internal customers give
us feedback on the quality of externally sourced business services.
4.19
(1.794)
4.16
(1.804)
4.23
(1.790)
7,627 /
-0.441 /
0.659
Do not reject 4.37
(1.758)
3.79
(1.819)
5,553 /
-2.334 /
0.020
Reject
Our external customers give
us feedback on the quality of externally sourced business
3.57
(1.916)
3.07
(1.764)
3.99
(1.944)
5,708 /
-3.714 /
0.000
Reject 3.62
(1.918)
3.46
(1.918)
6,422 /
-0.619 /
0.536
Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
192
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
services.
Process management
(0.862)
3.72
(1.636)
3.74
(1.677)
3.70
(1.607)
7,856 /
-0.038 /
0.970
Do not reject 3.91
(1.647)
3.29
(1.537)
5,276/
-2.827 /
0.005
Reject
We regularly inspect, assess,
or approve the quality of our externally sourced business services.
4.24
(1.868)
4.17
(1.893)
4.29
(1.852)
7,629 /
-0.437 /
0.662
Do not reject 4.36
(1.825)
3.97
(1.947)
5,988 /
-1.512 /
0.131
Do not reject
We use electronic systems to
inspect, assess, or approve the quality of externally sourced business services.
3.15
(2.025)
3.18
(2.024)
3.13
(2.032)
7,713 /
-0.292 /
0.770
Do not reject 3.39
(2.062)
2.63
(1.845)
5,291 /
-2.848 /
0.004
Reject
Our company uses statistical
methods to monitor the quality of externally sourced business services.
3.26
(1.944)
3.32
(1.931)
3.20
(1.960)
7,557 /
-0.566 /
0.572
Do not reject 3.43
(1.986)
2.88
(1.802)
5,740 /
-1.985 /
0.047
Reject
Our company‟s processes
related to the provision of externally sourced business services are documented.
4.21
(1.941)
4.27
(1.935)
4.16
(1.953)
7,631 /
-0.433 /
0.665
Do not reject 4.46
(1.877)
3.65
(1.979)
5,207 /
-2.986 /
0.003
Reject
a Std. dev. = Standard deviation
b Sig. level = Significance level
Quality Management Practices for Business Services from a Buyer‟s Perspective
193
Table C- 5: Effects of QM practices for externally sourced BS in manufacturing, service, small and large companies
Constructs
(Cronbach’s alpha)
Items
Population
mean
(std. dev.a)
Mean value
manufacturing companies
(std. dev.a)
Mean value
service companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Service quality
(0.945)
4.28
(1.426)
4.19
(1.441)
4.35
(1.414)
7,332 /
-0.948 7
0.343
Do not reject 4.37
(1.406)
4.07
(1.456)
5,916 /
-1.629 /
0.103
Do not reject
Our company has been able
to enhance the overall quality of its externally sourced business services by
measures in the area of quality management for services during the last three years.
4.45
(1.634)
4.36
(1.748)
4.53
(1.534)
7,598 /
-0.494 /
0.621
Do not reject 4.47
(1.640)
4.40
(1.630)
6,572 /
-0.409 /
0.683
Do not reject
Our company has been able
to enhance the response time of the providers of its
externally sourced business services by measures in the area of quality management for services during the last three years.
4.39
(1.636)
4.30
(1.655)
4.46
(1.623)
7,446 /
-0.764 /
0.445
Do not reject 4.48
(1.579)
4.19
(1.751)
6,158 /
-1.197 /
0.231
Do not reject
Our company has been able
to enhance the know-how of the providers of its
externally sourced business services by measures in the area of quality management for services during the last three years.
4.32
(1.647)
4.17
(1.622)
4.45
(1.662)
7,028 /
-1.500 /
0.134
Do not reject 4.41
(1.652)
4.10
(1.624)
5,957 /
-1.576 /
0.115
Do not reject
Our company has been able to enhance the appearance
(for example, physical
3.83
(1.674)
3.74
(1.649)
3.91
(1.695)
7,298 /
-1.022 /
0.307
Do not reject 3.99
(1.575)
3.47
(1.836)
5,551 /
-2.346 /
0.019
Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
194
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
facilities, personal appearance) of the providers of its externally sourced business services by measures in the area of quality management for
services during the last three years.
Our company has been able
to enhance the attention and commitment of the providers of its externally sourced business services by
measures in the area of quality management for services during the last three years.
4.23
(1.524)
4.14
(1.515)
4.31
(1.532)
7,361 /
-0.917 /
0.359
Do not reject 4.30
(1.498)
4.08
(1.577)
6,190 /
-1.139 /
0.255
Do not reject
Our company has been able
to enhance the reliability of the providers of its externally sourced business
services by measures in the area of quality management for services during the last three years.
4.44
(1.541)
4.42
(1.556)
4.47
(1.534)
7,705 /
-0.306 /
0.759
Do not reject 4.55
(1.500)
4.21
(1.615)
5,837 /
-1.816 /
0.069
Do not reject
Satisfaction
(0.894)
3.99
(1.329)
3.86
(1.305)
4.10
(1.343)
6,986 /
-1.553 /
0.120
Do not reject 4.11
(1.277)
3.73
(1.411)
5,701 /
-2.038 /
0.042
Reject
Satisfaction of our internal
customers with externally sourced business services has increased during the last
4.30
(1.457)
4.27
(1.453)
4.33
(1.466)
7,652 /
-0.401 /
0.688
Do not reject 4.45
(1.345)
3.97
(1.643)
5,623 /
-2.225 /
0.026
Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
195
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
three years through measures in the area of quality management for these services.
Satisfaction of our external
customers with externally sourced business services
has increased during the last three years through measures in the area of quality management for these services.
3.82
(1.591)
3.57
(1.586)
4.04
(1.569)
6,429 /
-2.347 /
0.019
Reject 3.91
(1.544)
3.63
(1.683)
6,078 /
-1.211 /
0.226
Do not reject
Our company has reduced
the number of complaints of internal customers about the
quality of externally sourced business through measures in the area of quality management for these services.
4.11
(1.470)
4.10
(1.481)
4.12
(1.466)
7,791 /
-0.154 /
0.877
Do not reject 4.21
(1.375)
3.87
(1.646)
5,887 /
-1.718 /
0.086
Do not reject
Our company has reduced the number of complaints of
external customers about the quality of externally sourced business through measures in the area of quality management for these services.
3.72
(1.581)
3.46
(1.648)
3.93
(1.496)
6,409 /
-2.385 /
0.017
Reject 3.85
(1.549)
3.44
(1.624)
5,642 /
-2.051 /
0.040
Reject
Cost efficiency
(0.873)
4.21
(1.456)
4.28
(1.490)
4.16
(1.430)
7,450 /
-0.745 /
0.456
Do not reject 4.41
(1.446)
3.79
(1.395)
5,046 /
-3.262 /
0.001
Reject
Our company has been able 4.27 4.50 4.08 6,729 / Reject 4.50 3.77 5,069 / Reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
196
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
to lower the purchase prices of externally sourced business services through measures in the area of quality management for services during the last three years.
(1.752) (1.803) (1.689) -2.019 /
0.043
(1.792) (1.554) -3.253 /
0.040
Our company has been able
to lower the cost for quality failures of externally sourced business services through measures in the area of quality management for
services during the last three years.
4.12
(1.566)
4.08
(1.568)
4.15
(1.570)
7,688 /
-0.336 /
0.737
Do not reject 4.26
(1.519)
3.79
(1.631)
5,627 /
-2.208 /
0.001
Reject
Our company has been able
to lower its operating costs through measures in the area of quality management for externally sourced services during the last three years.
4.25
(1.569)
4.27
(1.624)
4.24
(1.527)
7,860 /
-0.031 /
0.975
Do not reject 4.46
(1.564)
3.79
(1.489)
5,096 /
-3.215 /
0.027
Reject
Value of quality management
(0.919)
4.22
(1.501)
4.26
(1.524)
4.18
(1.485)
7,717 /
-0.280 /
0.779
Do not reject 4.30
(1.475)
4.03
(1.550)
6,129 /
-1.232 /
0.218
Do not reject
The benefits our company
achieved through its measures in the area of quality management for
externally sourced business services exceed the sacrifices for their implementation.
4.07
(1.629)
4.13
(1.646)
4.01
(1.618)
7,618 /
-0.459 /
0.646
Do not reject 4.12
(1.628)
3.95
(1.635)
6,332 /
-0.866 /
0.387
Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
197
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
The benefits our company achieved through its
measures in the area of quality management for externally sourced business services exceed the sacrifices for their maintenance.
4.00
(1.601)
4.07
(1.615)
3.93
(1.591)
7,556 /
-0.568 /
0.570
Do not reject 4.07
(1.591)
3.82
(1.618)
6,210 /
-1.096 /
0.273
Do not reject
Overall, our company‟s
measures in the area of quality management for externally sourced business services have paid off.
4.60
(1.625)
4.58
(1.638)
4.61
(1.620)
7,764 /
-0.202 /
0.840
Do not reject 4.72
(1.564)
4.32
(1.732)
5,953 /
-1.588 /
0.112
Do not reject
Further effects
(0.921)
4.00
(1.505)
3.77
(1.495)
4.20
(1.490)
6,464 /
-2.455 /
0.014
Reject 4.08
(1.508)
3.84
(1.493)
6,167 /
-1.159 /
0.247
Do not reject
Our activities related to the
quality management of our externally sourced business services have …
… led to an increase of our productivity.
4.20
(1.589)
4.14
(1.675)
4.25
(1.518)
7,656 /
-0.392 /
0.695
Do not reject 4.33
(1.635)
3.91
(1.452)
5,729 /
-2.012 /
0.044
Reject
… led to an enhancement of our competitive position.
4.19
(1.730)
4.02
(1.701)
4.34
(1.746)
6,947 /
-1.639 /
0.101
Do not reject 4.26
(1.730)
4.03
(1.728)
6,239 /
-1.037 /
0.300
Do not reject
… led to higher sales
volumes (for example, for externally sourced services
3.56
(1.765)
3.23
(1.754)
3.84
(1.733)
6,306/
-2.771 /
0.006
Reject 3.59
(1.767)
3.50
(1.771)
6,566 /
-0.419 /
0.675
Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
198
,
Constructs
(Cronbach’s alpha)
Items
Population mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
which were transferred to our end customers).
… led to innovation. 3.81
(1.751)
3.59
(1.747)
3.99
(1.740)
6,848 /
-1.811 /
0.070
Do not reject 3.92
(1.722)
3.55
(1.799)
5,975 /
-1.536 /
0.125
Do not reject
… led to an improvement of
the quality of goods or services offered by our company.
4.26
(1.790)
3.87
(1.799)
4.58
(1.722)
6,083 /
-3.158 /
0.002
Reject 4.28
(1.814)
4.21
(1.746)
6,569 /
-0.411 /
0.681
Do not reject
a Std. dev. = Standard deviation
b Sig. level = Significance level
Quality Management Practices for Business Services from a Buyer‟s Perspective
199
Table C- 6: Barriers to the implementation of QM practices for externally sourced business services in manufacturing, service, small and large companies
Constructs
(Cronbach’s alpha)
Items
Population
mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed,
α=0.05)
H0: M1 = M2
Mean
value
large
companies
(std. dev.a)
Mean
value
small
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed,
α=0.05)
H0: M1 = M2
Barriers (0.799)
3.96 (1.160)
4.09 (1.145)
3.85 (1.165)
6,779 / -1.908 / 0.056
Do not reject 4.03 (1.076)
3.81 (1.324)
6,104 / -1.276 / 0.202
Do not reject
The implementation of quality management for externally sourced business services is difficult because
…
… services are very heterogeneous.
4.51 (1.826)
4.76 (1.710)
4.31 (1.900)
6,850 / -1.809 /
0.071
Do not reject 4.60 (1.837)
4.32 (1.798)
6,196 / -1.120 /
0.263
Do not reject
… the evaluation of services is always subjective.
4.75 (1.633)
4.90 (1.646)
4.62 (1.619)
7,067 / -1.433 / 0.152
Do not reject 4.87 (1.534)
4.46 (1.814)
6,049 / -1.404 / 0.160
Do not reject
… the requirements regarding the services are often unclear.
3.99 (1.775)
4.12 (1.758)
3.88 (1.788)
7,249 / -1.107 / 0.268
Do not reject 4.10 (1.782)
3.74 (1.747)
6,059 / -1.381 / 0.167
Do not reject
… employees resist new processes and systems.
3.84 (1.628)
3.95 (1.695)
3.75 (1.571)
7,371 / -0.893 / 0.372
Do not reject 3.92 (1.526)
3.67 (1.835)
6,158 / -1.194 / 0.232
Do not reject
… top management does not support it enough.
3.50 (1.813)
3.64 (1.855)
3.39 (1.775)
7,269 / -1.070 / 0.285
Do not reject 3.66 (1.788)
3.15 (1.831)
5,652 / -2.148 / 0.032
Reject
… there is no adequate software support available.
3.46 (1.729)
3.51 (1.749)
3.42 (1.718)
7,612 / -0.468 / 0.640
Do not reject 3.42 (1.684)
3.55 (1.835)
6,545 / -0.458 / 0.647
Do not reject
… we cannot provide enough resources in our
3.67 (1.650)
3.77 (1.586)
3.60 (1.704)
7,335 / -0.955 /
Do not reject 3.63 (1.545)
3.78 (1.870)
6,495 / -0.552 /
Do not reject
Quality Management Practices for Business Services from a Buyer‟s Perspective
200
,
Constructs
(Cronbach’s alpha)
Items
Population
mean
(std. dev.a)
Mean value
manufacturing
companies
(std. dev.a)
Mean value
service
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed,
α=0.05)
H0: M1 = M2
Mean
value
large
companies
(std. dev.a)
Mean
value
small
companies
(std. dev.a)
Mann-
Whitney
U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed,
α=0.05)
H0: M1 = M2
company. 0.340 0.581 a Std. dev. = Standard deviation
b Sig. level = Significance level
Quality Management Practices for Business Services from a Buyer‟s Perspective
201
Table C- 7: Determinants of QM practices for externally sourced BS in manufacturing, service, small and large companies
Constructs
(Cronbach’s alpha)
Items
Population
mean
(std. dev.a)
Mean value
manufacturing companies
(std. dev.a)
Mean value
service companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Mean
value
large companies
(std. dev.a)
Mean
value
small companies
(std. dev.a)
Mann-
Whitney U score /
Z score /
Sig. levelb
Hypothesis
test result
(two-tailed, α=0.05)
H0: M1 = M2
Determinants
(0.691)
4.56
(1.096)
4.52
(1.095)
4.59
(1.101)
7,490 /
-0.673 /
0.501
Do not reject 4.69
(1.021)
4.28
(1.208)
5,463 /
-2.477 /
0.013
Reject
We focus our activities to
manage the quality of our externally sourced services to services …
… which are transferred to our customers.
4.50
(1.907)
4.30
(1.835)
4.68
(1.955)
6,877 /
-1.761 /
0.078
Do not reject 4.43
(1.851)
4.67
(2.030)
6,166 /
-1.175 /
0.240
Do not reject
… which are important for our production processes.
4.51
(1.929)
4.88
(1.773)
4.19
(2.006)
6,308 /
-2.676 /
0.007
Reject 4.75
(1.844)
3.97
(2.019)
5,254 /
-2.843 /
0.004
Reject
… which are important for our administrative processes.
3.87
(1.805)
3.85
(1.788)
3.88
(1.825)
7,801 /
-0.134 /
0.893
Do not reject 4.01
(1.763)
3.54
(1.863)
5,809 /
-1.849 /
0.065
Do not reject
… which represent an
important share of our purchasing volume.
5.07
(1.631)
4.91
(1.735)
5.20
(1.533)
7,273 /
-1.080 /
0.280
Do not reject 5.25
(1.536)
4.67
(1.770)
5,499 /
-2.474 /
0.013
Reject
… which are well described/specified.
3.78
(1.662)
3.57
(1.753)
3.96
(1.564)
6,749 /
-1.991 /
0.046
Reject 4.00
(1.669)
3.29
(1.547)
5,230 /
-2.957 /
0.003
Reject
… for which a quality
failure represents a particular risk for us.
5.64
(1.491)
5.61
(1.543)
5.67
(1.451)
7,790 /
-0.159 /
0.873
Do not reject 5.70
(1.451)
5.51
(1.577)
6,336 /
-0.877 /
0.380
Do not reject
a Std. dev. = Standard deviation
b Sig. level = Significance level
202 Quality Management Practices for Business Services
from a Buyer‟s Perspective
C.5 Conclusions, limitations and future research
This study wanted to examine to which extent buying companies adopt QM practices
for their externally sourced BS, what the effects of their usage as well as barriers and
determinants of their implementation are. Furthermore, it examined if adoption, ef-
fects, barriers and determinants of QM practices for incoming services differ between
manufacturing and service as well as between large and small companies.
It was found out that service design, workforce management, management support,
customer involvement, quality information, process and provider management are the
most widely used QM practices for externally sourced BS. Moreover, significant dif-
ferences in the adoption of QM practices for externally sourced BS and its effects on
organizational performance between manufacturing and service as well as between
large and small companies were detected. Therefore, I reject the first two hypotheses.
However, I did not detect significant distinctions regarding the barriers associated with
the implementation of QM for these services and thus do not reject the third hypothe-
sis. Results related to the fourth hypothesis are mixed. While I could identify signifi-
cant differences between large and small companies regarding the determinants of QM
for incoming services on the construct level, I did not detect any between manufactur-
ers and service firms on the construct level.
C.5.1 Managerial implications
From a managerial perspective, key findings from our study can be summarized as
follows:
QM for externally sourced BS is associated with positive effects such as en-
hanced service quality, higher customer satisfaction and reduced costs. The posi-
tive effects of QM for BS are perceived to exceed the costs of its implementation
and maintenance. It may therefore be a profitable investment for buying compa-
nies to expand their efforts in QM for incoming services.
In contrast to QM for goods, service companies excel manufacturers in the adop-
tion of management support and customer involvement when regarding QM for
externally sourced services. This means that manufacturing companies which
strive to improve their QM for services can learn from service providers. In par-
Quality Management Practices for Business Services from a Buyer‟s Perspective
203
ticular, they may try to imitate the knowledge of service providers regarding the
integration of requirements and feedback of their external customers as well as
the analysis of their satisfaction in order to improve the quality of the services
they purchase.
Large companies outperformed small ones in the adoption of QM practices for
externally sourced BS and could also achieve higher levels of positive effects on
performance. For managers of small firms, this means that it may be worthwhile
extending their efforts into QM for incoming services. For example, they may
invest more time and resources into improving their activities of obtaining quali-
ty information, thorough service design, and process or provider management.
Our analysis showed that the barriers associated to the implementation of QM for
BS are similar among industries and companies of different sizes. They are most-
ly related to the peculiar characteristics of services such as heterogeneity and in-
tangibility rather than more specific organizational factors such as degree of
specification, software support etc. For purchasing managers this means that they
should strive to reduce the impact of service characteristics before taking further
QM activities. For example, they may try to reduce heterogeneity by standardiz-
ing externally sourced BS. For example, this could be achieved by defining ho-
mogeneous service definitions for major groups of externally sourced services,
for example, transportation services, facility services etc. Furthermore, they may
introduce systems of receiving customer feedback and analyzing their satisfac-
tion with the purchased services in order to systematically monitor subjective
evaluations of service quality.
Before taking further action to implement QM for externally sourced BS, buying
companies may want to prioritize the services in order to implement it sequen-
tially. Our analysis of the determinants of QM for incoming services suggests
that the perceived risk associated with quality failure, purchasing volume and us-
age of the service (for example, consumption for the production process or trans-
fer to external customers) may be suitable criteria for managers to discover the
services a buying company should focus its QM activities on.
204 Quality Management Practices for Business Services
from a Buyer‟s Perspective
C.5.2 Theoretical implications
This study provides several theoretical insights into service research in general and
into the quality management for BS from a buying company‟s perspective in particu-
lar.
First, I analyzed quality management from the perspective of a buying company, i.e.
from a different perspective than the one taken by most of the previous empirical stud-
ies, and for BS, i.e. for a different object of quality management than of many other
studies in quality management. Examining research questions from a different angle is
important for increasing the generalizability and extension of previous findings (Tsang
and Kwan, 1999). Overall, our results suggest that quality management has positive
effects on organizational performance when it is implemented for externally sourced
BS. I thus transfer and corroborate findings of earlier studies which found positive re-
lationships between the adoption of quality management for outgoing goods by manu-
facturing companies (for example, Dow et al., 1999; Cua et al., 2001; Kaynak and
Hartley, 2008; Sila and Ebrahimpour, 2005; White, 1996).
Second, by identifying and analyzing differences related to QM for BS between manu-
facturing and service as well as between large and small companies, this study con-
tributed to the existing body of contingency research in operations and service man-
agement following a call by Sousa and Voss (2008). As I found several significant dif-
ferences regarding the adoption of QM practices, its effects and determinants, our re-
sults cast some doubt on the universal applicability of QM suggested by previous re-
search (for example, Crosby, 1979; Deming, 1986; Flynn et al., 1995; Hendricks and
Singhal, 1997; Juran and Blanton Godfrey, 2000). Rather, they signify that research on
QM may not only consider the perspective of the user of QM (i.e. buying or selling
company), the object of QM (i.e. goods or services) but also contingent factors such as
industry and size of company.
Third, the successful implementation of QM practices for externally sourced BS is to a
large degree determined by general characteristics of services (for example, their het-
erogeneity and their subjective evaluation) rather than industry or company-related
factors.
Quality Management Practices for Business Services from a Buyer‟s Perspective
205
C.5.3 Limitations and future research
This study also has some limitations which may, however, be useful starting points for
future research. First, I used cross-sectional data to test our hypotheses which captured
the situation at buying companies at one point in time (Fink, 1995). QM practices and
their effects may, however, be constructs which are dynamic in nature. Thus, their de-
velopment may change over time and might be better examined over an extended peri-
od (Lakhal, 2009). In order to observe the implementation of quality management for
externally sourced BS and its complexities or barriers, future research may therefore
use longitudinal studies.
Furthermore, our results are based on perceptional, self-reported rather than objective,
publicly available archival information. Although this approach is in line with previous
research on quality management and services (for example, Choi and Eboch, 1998;
Stanley and Wisner, 2001; Kaynak and Hartley, 2008; Kaynak, 2003), future research
should nevertheless attempt to include more objective data into the examination of
quality management practices for externally sourced BS.
In addition, I did not examine the relationships between QM practices and between
them and organizational performance. Future research may add further insights into
questions regarding what the relationships between QM practices adopted by buying
companies for externally sourced BS are and how they are related to organizational
performance. Structural equation modelling may be a suitable research method to an-
swer these questions as it allows the simultaneous “estimation of multiple interrelated
dependence relationships” (Hair, Jr. et al., 2006: 711).
Moreover, our study examined the QM for all BS which were externally purchased by
the participating companies and did not make any differentiation between, for exam-
ple, services which represent a high or a low portion of a company‟s purchasing vol-
ume or whose quality failure represents a critical or non-critical risk to the buying
company. Our results suggest, however, that risk, purchasing volume and type of ser-
vice usage are important determinants of the QM for externally sourced services. Thus,
future research may examine how such factors affect the adoption of QM in more de-
tail, for example, by conducting case studies.
Finally, I did not distinguish between different service categories a buying company
may purchase (for example, professional services, logistics services, facility services
etc.). Thus did not take the nature of the service as potential contingency factor into
account. Future research may therefore replicate this study for just one group of BS.
206 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Despite these limitations, I am confident that the study presents a useful starting point
for further investigations into QM for BS and enlarges the scope of service research.
Quality Management Practices for Business Services from a Buyer‟s Perspective
207
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216 Quality Management Practices for Business Services
from a Buyer‟s Perspective
D Quality management for business services
from a buyer’s perspective
Publication information
The fourth paper was submitted to the International Journal of Operations Manage-
ment and is currently under review:
Holschbach, E., & Hofmann, E. Quality management for business services from a
buyer‟s perspective. International Journal of Operations Management: Under review.
Abstract
This paper investigates how buying companies manage the quality for their externally
sourced business services (BS). It explores what the relationships between quality
management (QM) practices for these services are and how they are related to selected
measures of organizational performance. Based on a comprehensive literature review,
this study first develops a research model. The associated hypotheses are then tested
using cross-sectional survey data from 260 manufacturing and service companies
mainly operating in Austria, Germany and Switzerland. The data analysis using struc-
tural equation modelling (SEM) supports the proposed hypotheses. This study fills a
theoretical gap as previous literature has predominantly adopted the perspective of a
goods or service provider and did not specifically address QM for externally sourced
services. The results reveal that QM for incoming BS positively affects organizational
performance with provider involvement, process management, service design and cus-
tomer involvement directly influencing service quality. The insights obtained from this
paper can assist buying companies in their decision on how to design QM practices for
incoming BS.
Keywords: Quality management; services; structural equation modelling
D.1 Introduction
Nowadays, services represent a significant share of the purchasing volume of most
companies (Axelsson & Wynstra, 2002; Jackson, Neidell, & Lunsford, 1995; OECD,
2000; Schneider & White, 2004). Some authors estimate that externally purchased ser-
vices on a weighted average account for more than half of a company‟s total spend
(Fearon & Bales, 1995). More recent studies suggest that the ratio of BS to total pur-
Quality Management Practices for Business Services from a Buyer‟s Perspective
217
chasing volume lies between 15 and 28% for manufacturing companies (BME, 2005:
5; Centre for Management Development, 2005). The share of these business-to-
business services on the total purchasing volume may even increase in the future due
to a continuous trend towards concentration on core competencies and resulting out-
sourcing (Cox, Chicksand, Ireland, & Davies, 2005; Ellram, Tate & Billington, 2007;
Fuller, 1998; Krause, Scannell, & Calantone, 2000; Miettinen, Ventovuori & Hyttinen,
2005; Murray & Kotabe, 1999; Smeltzer & Ogden, 2002; van der Valk & Rozemeijer,
2009). In addition, the portion of services on many product offerings is increasing due
to a risen demand for augmented core goods (Nilsson, Johnson, & Gustafsson, 2001;
Wise & Baumgartner, 1999).
Despite the growing significance of BS, most buying departments have focused on the
optimization of the supply of goods (Axelsson & Wynstra, 2002; Ellram et al., 2007;
van der Valk, 2008; van der Valk, 2007). Similarly, the academic literature on pur-
chasing has predominantly concentrated on the supply of goods (Bals, Hartmann, &
Ritter, 2009; Cox et al., 2005; Ellram et al., 2007; Smeltzer & Ogden, 2002; van der
Valk & Rozemeijer, 2009; van der Valk, 2008; Wynstra, Axelsson, & van der Valk,
2006). In particular, QM of externally purchased BS from the perspective of a buying
company has received little attention so far by academics (Hemsworth, Sánchez-
Rodríguez, & Bidgood, 2008; Hemsworth, Sánchez-Rodríguez, & Bidgood, 2005;
Sánchez-Rodríguez & Martínez-Lorente, 2004). Accordingly, the literature on QM
predominantly has adopted the viewpoint of a provider of goods or services, and tried
to answer the question how sellers can improve the quality of the products or services
offered to their customers (Forker, 1997; Fynes & Voss, 2002; Flynn, Schroeder, &
Sakakibara, 1994; Rönnbäck & Witell, 2008). However, research on the question how
companies receiving goods or services manage their quality is scarce (Forker, Mendez,
& Hershauer, 1997; Fynes, 1999; Fynes & Voss, 2002; Molina-Azorín, Tarí, Claver-
Cortés, & López-Gamero, 2009; Stanley & Wisner, 2001). The relative disregard of
QM from a buyer‟s perspective is surprising as the quality of a company‟s output is
highly dependent on the quality of its input (Forker, 1997; Forker et al., 1997; Ghoba-
dian & Gallear, 1997; Krause, Pagell, & Curkovic, 2001; Yang, Wong, Lai, & Ntoko,
2009).
So far, only little research has examined the QM practices used by buying companies.
Sánchez-Rodríguez & Martínez-Lorente (2004) presented a study examining the im-
plementation of QM practices in the purchasing function and their impact on purchas-
ing‟s performance (Sánchez-Rodríguez & Martínez-Lorente, 2004). More recently,
218 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Hemsworth et al. (2005) and Hemsworth et al. (2008) verified and extended their re-
sults using the same sample. However, these contributions regard manufacturing com-
panies receiving goods as unit of analysis and are limited to perceptions of purchasers
regarding a reduced set of QM practices only (Hemsworth et al., 2008; Hemsworth et
al., 2005; Sánchez-Rodríguez & Martínez-Lorente, 2004). They may thus neglect the
particular characteristics of services and their impact on the adoption of QM practices
by buying companies. Furthermore, most of these studies (Hemsworth et al., 2005;
Hemsworth et al., 2008) operationalized QM practices as a single construct and thus
do not examine their direct and indirect effects on organizational performance
(Curkovic, Melnyk, Calantone, & Handfield, 2000; Kaynak, 2003; Rönnbäck &
Witell, 2008).
Therefore, this study wants to answer the following two research questions (RQ):
RQ 1: What are the relationships between QM practices adopted by buying compa-
nies for externally sourced BS?
RQ 2: What are the relationships of these practices to selected measures of organiza-
tional performance?
This paper contributes to theory in the area of QM by examining QM practices from
the perspective of a customer in a B2B environment instead of a vendor. Furthermore,
it specifically focuses on QM practices for externally sourced BS and testing the rela-
tionships between QM practices and their effects on organizational performance.
Methodologically, the study is based on a review of related literature in the area of QM
on which it formulates 20 hypotheses. These are tested by analysing data from an
online survey of 260 companies using SEM. Thus, the study adds further insights to
the large body of research on QM published in the Journal of Operations Management
(for example, Kaynak, 2003; Kaynak & Hartley, 2008; Nair, 2006; Sila, 2007; Sousa
& Voss, 2002; Sroufe & Curkovic, 2008; Zu, Fredendall, & Douglas, 2008).
The remainder of this paper is divided into five sections: After these introductory re-
marks, the second section provides a research model and related hypotheses based on a
review of the literature on QM and service quality. The third section introduces the
data collection procedure, the sample and data analysis methods and presents their re-
sults. The fourth section discusses these results. Finally, we outline the managerial and
theoretical implications and propose future areas of further research in the fifth sec-
tion.
Quality Management Practices for Business Services from a Buyer‟s Perspective
219
D.2 Theoretical background
The following section shortly investigates relevant research regarding the components
of QM and their effects on organizational performance. In doing so, it draws on litera-
ture on QM stemming from the wider domain of operations management and – partic-
ularly in the paragraph on performance – academic work on service quality from mar-
keting. After exploring the academic literature, the hypotheses are developed and a
research model is presented.
D.2.1 QM practices and services
We understand QM as a collective, interlinked system of quality practices which is
associated with organizational performance (Anderson, Rungtusanatham, & Schroed-
er, 1994; Choi & Eboch, 1998; Madu, Kuei, & Lin, 1995). As Hackman & Wageman
(1995) point out, QM and Total Quality Management (TQM) are highly convergent
and therefore often used interchangeably.
Early empirical research on QM has mostly focussed on attempts to define what con-
stitutes QM (Kaynak, 2003; Zakuan, Yusof, Laosirihongthong, & Shaharoun, 2010).
These constituting elements of QM are called QM practices (Zu, 2009) which can be
understood as operational interventions implemented by management to achieve quali-
ty performance objectives (Das, Handfield, Calantone, & Ghosh, 2000).
Three levels of examination have to be distinguished when examining QM (Dean &
Bowen, 1995; Evans & Lindsay, 2002; Rönnbäck & Witell, 2008; Sousa & Voss,
2002): (a) principles, i.e. the basic management systems necessary for QM to function,
for example, continuous improvement, customer focus etc. (Zu, 2009), (b) practices,
i.e. the observable constructs of QM, for example, top management support, quality
information etc. (Das et al., 2000), (c) techniques, i.e. the guidelines and methods to
perform certain activities, for example, quality function deployment, histograms etc.
(Rönnbäck & Witell, 2008). Sousa & Voss (2002) recommend that research on QM
should deal with the level of practices since „principles are too general for empirical
research and techniques are too detailed to obtain reliable results‟ (Sousa & Voss,
2002: 92). This paper concedes their view.
Saraph, Benson, & Schroeder (1989) were the first who identified a core set of eight
QM practices. Later, Flynn et al. (1994) categorized QM practices into seven dimen-
sions: top management support, quality information, process management, product (or
220 Quality Management Practices for Business Services
from a Buyer‟s Perspective
service) design, workforce management, supplier and customer involvement. Accord-
ing to Fynes (1999), these practices also mirror the dimensions used in quality award
schemes such as the Malcolm Baldrige National Quality Award (Baldrige National
Quality Program, 2010) or the European Foundation for Quality Management Award
(European Foundation for Quality Management, 2010) and are therefore the ones most
commonly examined (see also Molina-Azorín et al., 2009; Zu, 2009). Thus, they will
form the constructs, along which QM for BS by buying companies is to be examined.
Marketing literature emphasizes that services have peculiar characteristics which dif-
ferentiate them from goods (Fisk, Brown, & Bitner, 1993; Seth, Deshmukh, & Vrat,
2006). Among these are heterogeneity, intangibility, inseparability of production and
consumption (Parasuraman, Zeithaml, & Berry, 1985) as well as the fact that service
production normally, but not necessarily always, involves some interaction between
customer and provider (Grönroos, 2007; Meffert & Bruhn, 2000). These characteris-
tics can all be considered continua on which different service types vary (Schneider &
White, 2004). More recently, Wynstra et al. (2006) emphasize that the application of a
BS by a buying organization represents another differentiator to goods. BS in this con-
text are understood as services which are delivered by firms or organizations and
bought by other firms or organizations (Axelsson & Wynstra, 2002; van der Valk &
Rozemeijer, 2009). The authors show that externally sourced BS can either be con-
sumed by buying companies internally or transferred to the customer with or without
changes (Wynstra et al., 2006; van der Valk, Wynstra, & Axelsson, 2009; van der
Valk, 2007).
The implications of this part of the literature review for our study are twofold: First,
previous studies provide us with a first set of practices which buying companies may
adopt to manage the quality of their externally sourced BS. Second, the differences
between goods and services and particularly their different usage may affect the design
of QM practices and require the particular attention of the researchers when construct-
ing the survey instrument. For example, as there may be internal and external consum-
ers of BS purchased by the buying company, existing constructs regarding practices
such as service design and customer involvement may have to be adjusted. The con-
struction of the survey instrument will be discussed in detail in Section D.3.
Quality Management Practices for Business Services from a Buyer‟s Perspective
221
D.2.2 QM and performance
Ample amount of research in the area of operations management and particular QM
has been conducted on the relationship between QM practices and organizational per-
formance (Zakuan et al., 2010). Organizational performance in such studies is often
regarded as how well an organization achieves its market-oriented or operational as
well as financial goals (Lakhal, 2009). In these works operational performance was,
for example, measured by constructs such as percentage of defects, cost of quality,
product quality, on-time delivery, productivity results whereas return-on-assets, return-
on-equity, return-on-investment, market share and stock prices were used for measur-
ing financial business performance (for an overview of empirical studies on the effect
of QM practices on organizational performance please refer to Kaynak, 2003; Molina-
Azorín et al., 2009; Nair, 2006; Sila & Ebrahimpour, 2005). Sometimes these studies
provide mixed results (Das et al., 2000; Nair, 2006; Rönnbäck & Witell, 2008). How-
ever, most authors agree that the use of QM practices has a positive, significant and
strong effect on operational performance (Dow, Samson, & Ford, 1999; Cua, McKone,
& Schroeder, 2001; Maani, Putterill, & Sluti, 1994; Sila & Ebrahimpour, 2005; Sluti,
Maani, & Putterill, 1995; Sousa & Voss, 2002; White, 1996). The impact of QM prac-
tices on financial business performance is seen as positive and significant, but in some
cases less strong than on operational performance (Capon, Farley, & Hoenig, 1990;
Hendricks & Singhal, 1997; Nilsson et al., 2001; Powell, 1995; Rönnbäck & Witell,
2008).
Authors in the area of service marketing add the customer perspective to the measure-
ment of organizational performance. They conclude that there is a causal relationship
between service quality and customer satisfaction and that service quality is an ante-
cedent of customer satisfaction (Churchill & Surprenant, 1982; Cronin, Jr. & Taylor,
1992; Cronin, Jr., Brady, & Hult, 2000; Schneider & White, 2004; Storbacka,
Strandvik, & Grönroos, 1994; Woodside, Frey, & Daly, 1989). Moreover, many au-
thors also posit that customer satisfaction is positively – although not always perfectly
– related to customer‟s repurchase intentions and thus to a firm‟s sales volume (Cro-
nin, Jr. et al., 2000; Patterson & Spreng, 1997; Schneider & White, 2004; Shonk,
2006; Kuo, Wu, & Deng, 2009). These relationships are conceptually reflected in the
service profit chain, a theoretical framework developed by Heskett, Jones, Loveman,
Sasser, Jr., & Schlesinger (2008). The model proposes that „[…] profit and growth are
stimulated primarily by customer loyalty. Loyalty is a direct result of customer satis-
faction. Satisfaction is largely influenced by the value of services provided to custom-
222 Quality Management Practices for Business Services
from a Buyer‟s Perspective
ers. Value is created by satisfied, loyal, and productive employees. Employee satisfac-
tion, in turn, results primarily from high-quality support services and policies that ena-
ble employees to deliver results to customers‟ (Heskett et al., 2008: 120). Consequent-
ly, higher service quality may result in higher satisfaction of internal or external cus-
tomers and finally in higher sales revenues.
The discussion of the literature on QM and performance shows that – in the case of
QM for BS from a buyer‟s perspective – positive relationships can particularly be as-
sumed between QM practices and operational performance as well as service quality
and customer satisfaction. This circumstance is made allowance for by setting up our
hypotheses in the next section.
D.2.3 Proposed hypotheses and resulting research model
As discussed before, the literature on the usage of QM practices by buying companies
for externally sourced BS is limited. Therefore, we draw our hypotheses pertaining to
the relationships between QM practices and between them and organizational perfor-
mance on existing literature on operations management (especially QM for goods) and
service marketing. Selected studies from these areas empirically supporting our hy-
potheses are introduced in Table D- 4 in the appendix. The resulting research model
with its 20 hypotheses is shown in Figure D- 1.
.
Quality Management Practices for Business Services from a Buyer‟s Perspective
223
Figure D- 1: Research model
Quality
infor-mation
Provider
involve-ment
Top mgt.
support
Customer
involve-ment
H1
Process
mgt.
Workforce
mgt.
Service
design
Service quality Satisfaction
Cost efficiency Value of QM
H2
H4
H5
H6
H7
H8
H9
H20
H17
H19
H12
H13
H15
H14H10
H11
H3
H16
H18
Relationships between QM practices
Relationships between QM practices and organizationalperformance measures
Relationships between organizationalperformance measures
224 Quality Management Practices for Business Services
from a Buyer‟s Perspective
D.2.3.1 Hypothesized relationships between QM practices
Many contributions on QM highlighted the role of top management support and man-
agement leadership for a successful implementation of QM (Deming, 1986; Ishikawa,
1985; Juran, 1989). Top management support comprises managers actively accepting
their responsibility for quality, participating in quality improvement efforts and setting
goals regarding quality (Saraph et al., 1989; Ahire, Landeros, & Golhar, 1995). The
management of relationships with service providers is essential for QM of externally
sourced BS (Kaynak & Hartley, 2008; Robinson & Malhotra, 2005) as the quality of
incoming products or services is crucial for the quality of delivered products or ser-
vices (Forker, 1997; Forker et al., 1997; Yang et al., 2009). Top management of a buy-
ing company can promote beneficial relationships with providers of BS, for example,
by allowing prioritizing quality and delivery performance over price in supplier selec-
tion and providing resources for the creation of systems of provider certification and
assessments (Flynn, Schroeder, & Sakakibara, 1995; Sila & Ebrahimpour, 2005; Zu et
al., 2008). Consequently, we propose:
H 1: Top management support is positively related to provider involvement.
It is also top management which is in charge to provide required trainings and other
resources for employees in order to realize the new principles and tools related to QM
(Ahire & O‟Shaughnessy, 1998). Furthermore, top management can establish an envi-
ronment which allows open communication, cooperation and learning thus involving
employees into the necessary change processes when implementing QM (Anderson et
al., 1994; Das et al., 2000; Flynn et al., 1995). Thus, the literature allows us to hypoth-
esize:
H 2: Top management support is positively related to workforce management.
Products and services are usually not designed within one organization alone but in
more or less close cooperation with key customers and/or suppliers (Das et al., 2000;
Robinson & Malhotra, 2005). Top management can influence the degree of integration
that occurs during service design within the buying company, with its customers as
well as with key supply chain partners (Kaynak & Hartley, 2008). We found five stud-
ies that discovered a positive relationship between top management support and prod-
uct design (Ahire & O‟Shaughnessy, 1998; Flynn et al., 1995; Kaynak & Hartley,
Quality Management Practices for Business Services from a Buyer‟s Perspective
225
2008; Kaynak, 2003). We argue that the same relationship may hold between top man-
agement support and the design of externally sourced BS and therefore propose:
H 3: Top management is positively related to service design.
Similarly, top management support may directly be related to customer involvement.
Top management can provide the required policies, structures and work environments
which foster customer orientation within the buying company (Ahire &
O‟Shaughnessy, 1998). Furthermore, it can promote customer involvement by provid-
ing the resources for plant visits, requiring the solicitation of detailed customer needs
and the inclusion of customer representatives on service design teams (Kaynak &
Hartley, 2008; Flynn et al., 1995; Zu et al., 2008).
H 4: Top management support is positively related to customer involvement
Many authors have used case studies and anecdotal examples to contend that QM can
best be achieved when there is a high level of human resource or workforce manage-
ment (Li, 1997; Hackman & Wageman, 1995). Workforce management, among other
components, encompasses a clear commitment to quality-related training, involvement
of employees in continuous improvement and problem solving as well as recognition
and reward systems regarding quality (Dean & Bowen, 1995; Fynes, 1999; Sila &
Ebrahimpour, 2003). As these tools can increase awareness for quality-related issues
of employees, we argue in line with empirical findings by Curkovic et al. (2000),
Kaynak & Hartley (2008), and Zu et al. (2008) that more intense workforce manage-
ment can improve the usage of quality information. Therefore, we posit that:
H 5: Workforce management is positively related to quality information.
The management by fact is highly advocated by the early QM advocates (Deming,
1982; Garvin, 1988; Ishikawa, 1985; Juran & Blanton Godfrey, 2000). It can be
achieved by a steady flow of accurate and timely quality-related information such as
failure and complaint rates, rework, warranty costs as well as benchmarking with other
organizational units or companies and further usage of these data for quality improve-
ments (Ahire et al., 1995; Li, 1997; Evans & Lindsay, 2002). Techniques related to
quality information are, for example, histograms, Pareto charts, cause-and-effect dia-
grams etc. (Fynes, 1999; Zwikael & Globerson, 2007). The provision and usage of
quality information may enhance the involvement of providers of externally sourced
BS by offering the required data for their monitoring, certification and assessment
(Forza & Filippini, 1998; Sila & Ebrahimpour, 2005). We therefore argue that:
226 Quality Management Practices for Business Services
from a Buyer‟s Perspective
H 6: Quality information is positively related to provider involvement.
It may also be assumed that quality information positively affects process manage-
ment. For example, quality information provides the employees of the buying compa-
ny with data required to detect process disruptions in service production and delivery
as early as possible. Furthermore, efficient quality information may enhance the in-
spection, assessment and approval of purchased services by the buying company. Sev-
eral empirical studies have confirmed the linkage between quality information and
process management from the perspective of manufacturers of goods (Ahire &
O‟Shaughnessy, 1998; Choi & Eboch, 1998; Lee, Rho, & Lee, 2003). Accordingly, we
propose for companies buying BS:
H 7: Quality information is positively related to process management.
Furthermore, the service design process can only be efficient if quality-related data are
collected and available. For example, failure and complaint information can be an es-
sential source for defining and specifying the required characteristics of BS which are
newly purchased by a buying company. In line with Ahire & O‟Shaughnessy (1998)
and Kaynak & Hartley (2008) we thus argue that:
H 8: Quality information is positively related to service design.
Customer involvement comprises the effective measurement and monitoring of cus-
tomers‟ needs, expectations and/or satisfaction (Molina-Azorín et al., 2009; Powell,
1995). However, several authors have posited that the definition of requirements and
specifications is more difficult for services than for goods due to their specific charac-
teristics (see for example, Jackson et al., 1995; Lindberg & Nordin, 2008). These diffi-
culties may be increased by the circumstance that BS can have internal service cus-
tomers within the buying company as well as external ones (Wynstra et al., 2006; van
der Valk et al., 2009; van der Valk, 2007). Successful involvement of internal and ex-
ternal service customers may be even more crucial for efficient QM for BS than for
goods (cf. Curkovic et al., 2000; Das et al., 2000; Hackman & Wageman, 1995). Flynn
et al. (1995) proposed that customer involvement is directly related to product design.
However, their results did not support their hypotheses. Considering the peculiarities
of BS and the resulting difficulties in service design, however, we argue that intense
customer involvement positively affects service design.
H 9: Customer involvement is positively related to service design.
Quality Management Practices for Business Services from a Buyer‟s Perspective
227
Ahire & Dreyfus (2000) emphasize that successful manufacturing firms make exten-
sive use of product design. Such companies aim at designing quality into the products
so that the ensuing manufacturing processes are not disrupted by quality failures
(Ahire & Dreyfus, 2000; Flynn et al., 1995). The design process can comprise tech-
niques such as using cross-functional teams for product design, involvement of suppli-
ers and customers into the design process, intensive tests of the good before production
etc. (Fynes & Voss, 2002; Sila & Ebrahimpour, 2003). Knowledge and experience
gained during the design process can also be used to optimize the production processes
and thus process management (Ahire & Dreyfus, 2000). We argue that the same rela-
tionships hold for the design of externally sourced BS and therefore offer the follow-
ing hypothesis:
H 10: Service design is positively related to process management.
In line with empirical findings by Kaynak (2003), Kaynak & Hartley (2008) and Zu et
al. (2008) we also posit that provider involvement positively affects process manage-
ment. Long-term relationships with service providers may, for example, lead to a bet-
ter understanding of the working processes of supply chain partners and a careful se-
lection and permanent assessment of a service provider may reduce process variability
(Flynn et al., 1995; Forza & Filippini, 1998). Therefore, we propose that
H 11: Provider involvement is positively related to process management.
D.2.3.2 Hypothesized relationships between QM practices and organizational
performance
Hackman & Wageman (1995) criticize that most researchers in QM use general organ-
izational outcomes, such as market share, profitability, stock price etc. as measure-
ments for the effects of QM practices. They point out that such outcomes can be the
result of many influential factors and thus they may not be directly related to QM prac-
tices alone. In order to be able to make more definite statements about cause and ef-
fect, they therefore accept using subjective measures for QM performance. These can
in return be better directly attributed to the adoption of QM practices (Hackman &
Wageman, 1995). Considering their view and the fact that QM for BS from the per-
spective of buying companies is a comparably uncharted area, we gave special atten-
tion to the discovery of potential outcomes which are closely related to the usage of
QM practices. We therefore conducted case studies with 16 manufacturing and service
228 Quality Management Practices for Business Services
from a Buyer‟s Perspective
companies before outlining this study and developing the associated measurement
scales. We ascertained that operating costs, service quality, customer satisfaction, and
value of QM may be appropriate measures of organizational performance closely re-
lated to QM. The hypothesized relationships between QM practices and these perfor-
mance measures and the relations among the performance measures themselves are
described in the following.
We first argue that higher levels of involvement of service providers results in higher
levels of service quality of externally sourced BS. For example, regular assessments of
service providers by the buying company may confront the supplier with its quality
issues and thus cause the vendor to improve its service quality continuously. Further-
more, provider evaluation may function as an instrument to identify low-performing
service providers. The buying company can then phase out these suppliers over time
which may lead to a higher overall level of quality for that specific service. In line
with empirical studies by Cua et al. (2001) and Krause et al. (2000) who detected a
strong and positive correlation between supplier management/development and con-
formance/service quality, we suggest that:
H 12: Provider involvement is positively related to service quality.
We further argue that process management directly enhances service quality. Perma-
nent monitoring of the production and delivery process for externally sourced BS, sys-
tems of service approval and process documentations may, for example, help to iden-
tify and correct quality problems as soon as they occur and thus increase service quali-
ty in the long run (Ahire & Dreyfus, 2000; Li, 1997). Some previous studies found
positive relationships between process management and measures of product quality
(Choi & Eboch, 1998; Cua et al., 2001; Lee et al., 2003; Li, 1997; Zu et al., 2008). We
therefore bring forward that the same relationships holds for externally sourced BS.
H 13: Process management is positively related to service quality.
Using cross-functional teams for the design of externally sourced BS, testing them in-
tensively etc. may also support the improvement of service quality. For example, high
levels of reliability of a product or service may be achieved by considering potential
failures from various perspectives during the design process (Flynn et al., 1995; Forza
& Filippini, 1998). Similar to Cua et al. (2001) and Kaynak & Hartley (2008) we
therefore posit that more intensive service design has positive effects on service quali-
ty.
Quality Management Practices for Business Services from a Buyer‟s Perspective
229
H 14: Service design is positively related to service quality.
In addition, customer involvement may support a company buying BS in its attempts
to receive detailed requirements of internal and external service consumers. Thus, it
may be able to better define the needed level of service quality before the actual pur-
chase (Fitzsimmons, Noh, & Thies, 1998). Regular assessments of satisfaction levels
and feedback from internal and external service customers may, by contrast, improve
the quality evaluation after the purchase (cf. Jackson et al., 1995) and hence enhance
service quality as well. Although the relationship between customer involvement and
service quality is not yet fully examined in research on QM (cf. Cua et al., 2001; Dow
et al., 1999; Samson & Terziovski, 1999), we bring forward the following hypothesis:
H 15: Customer involvement is positively related to service quality.
Although some of the seminal QM literature mentions customer satisfaction as the ma-
jor goal of any activity in QM (see, for example, Juran & Blanton Godfrey, 2000;
Deming, 1986), quality-related performance has been conventionally defined in terms
of operational performance (Das et al., 2000). Following the suggestions from Reeves
& Bednard (1994) we therefore introduce customer satisfaction as a crucial outcome
measure of QM and propose two hypotheses related to it. In accordance with Nilsson
et al. (2001) and Samson & Terziovski (1999) we first argue that involvement of cus-
tomers can directly increase customers‟ satisfaction by better defining customers‟ re-
quirements for BS (Evans & Lindsay, 2002).
H 16: Customer involvement is positively related to customer satisfaction.
D.2.3.3 Hypothesized relationships between measures of organizational per-
formance
As described earlier, various studies from the area of service marketing (see Section
D.2) and some studies in QM for goods (for example, Choi & Eboch, 1998; Das et al.,
2000; Madu, Kuei, & Jacobi, 1996) have shown that higher levels of service quality
also increase customer satisfaction. Therefore, we bring forward our next hypotheses:
H 17: Service quality is positively related to customer satisfaction.
Although the early proponents of QM already posited that higher levels of product
quality reduce manufacturing costs (Deming, 1986; Garvin, 1988), the existing empir-
ical evidence for this connection is still fragmentary (Maani et al., 1994). We only
230 Quality Management Practices for Business Services
from a Buyer‟s Perspective
found two studies which discovered a direct and positive relationship between the lev-
el of product quality and aggregated performance constructs including manufacturing
costs (Maani et al., 1994; Madu et al., 1995). As – together with enhancing customer
satisfaction – lowering costs is an overriding aim of QM, we include cost efficiency as
a separate construct in our network of performance measures. Higher levels of busi-
ness service quality may lower the purchase prices, cost of quality failures or operating
costs for buying companies. For example, BS better meeting the actual needs of cus-
tomers may reduce the purchase price by cutting-off non-required parts of the service.
Better service quality may also reduce the costs for re-negotiating and solving quality
problems. We therefore propose:
H 18: Service quality is positively related to cost efficiency.
Finally, we introduce the performance measure “value of QM” as the ultimate depend-
ent variable in our research model. We thus follow the suggestion by Hackman &
Wageman (1995) who advocate the use of outcome criteria which can be directly
traced back to the activities related to QM even when they are subjective. Value of
QM can be defined as „a ratio of total benefits received to total sacrifices‟ (Patterson &
Spreng, 1997: 416) related to the QM for externally sourced BS. We assume that high-
er levels of cost efficiency and customer satisfaction positively influence the value of
QM whereas the costs for the implementation and maintenance of QM may decrease
it. Therefore, we propose:
H 19: Cost efficiency is positively related to value of QM.
H 20: Customer satisfaction is positively related to value of QM
D.3 Research methodology
D.3.1 Development of the survey instrument
Three steps were taken to develop our survey instrument: First, an exploratory, multi-
ple, embedded (Yin, 2003) and comparative (Dul & Hak, 2008; Silverman, 2002) case
study was conducted in order to investigate the broader domain of purchasing of BS by
interviewing 32 representatives of 16 manufacturing and service companies. Among
other things, the case studies revealed that QM for externally sourced BS has positive
effects on their overall quality and can improve satisfaction. Furthermore, it became
Quality Management Practices for Business Services from a Buyer‟s Perspective
231
clear that QM for externally sourced BS not only involves purchasing and the service
provider but also internal as well as external customers. Thus, when investigating QM
and its effects, one should include both types of customers into the analysis.
Second, a prototype questionnaire was developed in German based on an extensive
review of literature in the areas of QM and service quality. Constructs from earlier re-
search were used whenever possible. Several items had to be adjusted, however, due to
the specifics of BS. Furthermore, constructs such as service design, customer involve-
ment and satisfaction had to include internal as well as external customers of the buy-
ing companies. The questionnaire and its subsequent version measured items on a sev-
en-point Likert scale with end points of “not at all (=1)” to “to the fullest extent (=7)”.
Third, the prototype questionnaire was pre-tested by seven purchasing managers, six
quality managers and four academics from the area of operations management. Each
of these filled out the questionnaire. Afterwards, we statistically tested the pilot study.
Due to the small sample size, our statistical tests were limited to Cronbach‟s alpha
(Cronbach, 1951) and item-to-total correlations. The values of Cronbach‟s alpha for all
constructs exceeded the recommended threshold of 0.7 (Nunnally & Bernstein, 1994)
apart from the constructs for workforce management, customer involvement and satis-
faction. We then discussed these results with the respondents. Their feedback and the
statistical analysis led to modifications of the wording of some survey questions for
these constructs.
D.3.2 Data collection and sample
The target population for this study consisted of manufacturing and service companies
buying BS from a wide array of industries. The data were obtained from firms operat-
ing in Austria, Germany and Switzerland through a cross-sectional web survey carried
out in 2010. The sample was drawn from two sources: First, a contact list of authors‟
university was used. Second, several contacts were found by searching publicly avail-
able company databases to avoid potential bias from convenience sampling (Zhu,
Sarkis, & Kee-hung, 2008).
Power analysis determined a target sample of 1,084 companies. In total, we identified
1,977 companies and contacted them by e-mail. 664 e-mails were undeliverable be-
cause contact data were out of date. This left us with a list of 1,313 usable e-mail ad-
dresses. Following the Tailored Design Method for web surveys (Dillman, 2007), we
sent out up to three reminders with a link to the survey to subjects which have not re-
232 Quality Management Practices for Business Services
from a Buyer‟s Perspective
sponded to the previous e-mails. In total, we received 513 responses. Responses with
missing values for the items related to the QM practices and performance measures
were excluded from further analysis. Thus, a sample of 260 complete questionnaires
remained. This reflects the experience that high abandonment rates after the first intro-
duction window are usual for web-based surveys (Grant, Teller, & Teller, 2005). The
response rate of 19.8 % is in line with other studies in this research area (for example,
Das et al., 2000; Ravichandran & Rai, 2000) and comparable to many other studies in
the wider field of organizational research (Yu & Cooper, 1983).
As can be seen in Table D- 1, the sample includes companies buying BS from a broad
range of industries. Also, these companies range from small and medium enterprises to
multinational corporations. Most of the responses came from Germany, followed by
Switzerland and Austria. The respondents majorly held positions such as head of pur-
chasing or purchasing manager followed by head of QM, chief executive officer
(CEO) and quality manager. Furthermore, many respondents represented other posi-
tions such as head of supply chain management, head of operations, head of marketing
etc. indicating that they were intensive consumers of BS purchased by their company.
We therefore concluded that the respondents possessed the required knowledge to an-
swer the questions appropriately.
Quality Management Practices for Business Services from a Buyer‟s Perspective
233
Table D- 1: Response sample composition
Response sample
size:
260 responsesa
Industry
Name of the NACEb group Number of
responses
Percentage
of responses
Manufacturing (C): 101 38.8%
Transportation and storage (H): 46 17.8% Administrative and support service activities (N): 29 11.2%
Information and communication (J): 15
5.8%
Professional scientific and technical activities (M): 12 4.6% Financial and insurance activities (K): 11 4.2%
Wholesale and retail trade; repair of motor vehicles and motorcycles (G):
11
4.2%
Construction (F): 9 3.5% Human health and social work activities (Q): 9 3.5%
Electricity, gas, steam and air conditioning supply (D): 5 1.9% Public administration and defence;
compulsory social security (O):
3
1.2%
Education (P): 2 0.8%
Others: 6 2.3% Number of
employees per
company
Category of number of employees
1-9 employees: 11 4.3% 10-49 employees: 27 10.6%
50-249 employees: 41 16.1%
240-999 employees: 47 18.4% 1,000 – 4,999 employees: 55 21.6%
≥ 5,000 employees: 74 29.0% Turnover per
company
Category of turnover
0 < 2 million Euro: 18 7.1%
2 < 10 million Euro: 17 6.7% 10 < 50 million Euro: 36 14.1%
50 < 250 million Euro: 48 18.8% 250 < 1,000 million Euro: 40 15.7%
1,000 < 5,000 million Euro: 41 16.1% ≥ 5,000 million Euro: 45 17.6%
Not specified: 10 3.9%
Country of
headquarter of
company
Country Austria: 11 4.2%
Germany: 139 53.5% Switzerland: 55 21.2%
Liechtenstein: 2 0.8%
Other: 6 2.3% Not specified: 47 18.1%
Respondent titles Title Head of purchasing: 66 25.9%
Purchaser: 30 11.8% Head of quality management: 30 11.8%
Quality manager: 17 6.7%
CEO: 27 10.6% Other (Head of supply chain management, head of
operations etc.): 85 33.3%
a Only the items regarding the constructs related to QM practices and performance had to be filled in by the respondents completely. By contrast, the respondents were free not to provide information regarding their demographics in order to ob-tain a sufficiently large sample. Therefore, the total number of responses regarding demographics is slightly lower for some
demographic items than the total number of responses for the rest of the questionnaire.
b According to Nomenclature statistique des activités économiques dans la Communauté européenne (NACE Rev. 2) (Euro-pean Commission, 2010).
234 Quality Management Practices for Business Services
from a Buyer‟s Perspective
D.3.3 Treatment of data, key informant, non-respondent and
common-method bias
In our study, responses containing missing data were excluded from further analyses.
In addition, we checked if multivariate normality can be assumed. It has to be noted
that data from 7-point Likert scales are by definition not normally distributed (Barnes,
Cote, Cudeck, & Malthouse, 2001). In line with Kline (2004), however, we assessed
the descriptive statistics to test for multivariate normality. All indicators showed a
skew level well below the threshold of 3 and kurtosis below the cut-off criterion of 10
(Kline, 2004).
We attempted to minimize key-informant bias by only requesting the informant with
the most comprehensive knowledge about QM for externally sourced BS within the
buying organization to complete the survey (Kumar, Stern, & Anderson, 1993). Ac-
cordingly, contacts were asked to forward the link to the web-survey to the experts
within their organization if they did not consider themselves competent. In addition, it
was suggested that key informants may answer the questionnaire collaboratively with
other employees involved into QM for BS. On average, the 260 completed question-
naires were filled out by 1.31 employees from the buying organization (standard de-
viation = 0.698, standard error of mean = 0.044). Furthermore, every respondent was
requested to assess his/her knowledge level regarding the topic as suggested by Kumar
et al. (1993). On a seven-point Likert scale, 76.8% of the participants evaluated their
level of knowledge as above average resulting in a mean of 5.20 (standard deviation =
1.196, standard error of mean = 0.076) equal or greater than the suggested threshold of
five (Li & Calantone, 1998). Thus, we considered the key-informants who have an-
swered the survey as knowledgeable and suitable for this survey.
In line with Armstrong & Overton (1977) potential non-response bias was evaluated
by conducting t-tests comparing early and late respondents. The companies were ap-
proached in four waves of electronic mailings. Therefore, responses from the first two
e-mails were compared with the ones from the latter two ones. Sample t-tests were
performed for the constructs related to QM and performance. The t-tests did not show
any significant differences between the data from early and late respondents. The two
groups were also not significantly different regarding the companies‟ demographics
(i.e. number of employees and turnover). As it can be assumed that late-respondent
bias is similar to non-respondent bias, we concluded that non-respondent bias is small
(Armstrong & Overton, 1977). In addition, we conducted telephone calls with 20 ran-
domly chosen non-respondents to find out what the reasons for their non-response
Quality Management Practices for Business Services from a Buyer‟s Perspective
235
were. As main reasons for their non-participation these companies stated the large
number of various surveys received, the lack of time due to other commitments and
existing policies not to respond to surveys. Such reasons suggest that non-response is
not specifically related to our study but to more general trends (Ravichandran & Rai,
2000). This qualitative information also suggests that non-respondents did not signifi-
cantly differ from respondents in our study.
Several measures were taken to minimize potential common-method bias (Podsakoff,
Mackenzie, Jeong-Yeon, & Podsakoff, 2003) from the outset: First, anonymity and
confidentiality was guaranteed to respondents in all communication (Podsakoff et al.,
2003). Second, the respondents were explained the usefulness of the study and offered
a copy of the results (Huber & Power, 1985). Third, Harman‟s single factor test was
conducted post facto as suggested by Podsakoff & Organ (1986). “The basic assump-
tion of this technique is that if a substantial amount of common method variance is
present, either (a) a single factor will emerge from the factor analysis, or (b) one „gen-
eral‟ factor will account for the majority of the covariance in the independent and cri-
terion variables” (1986: 536). We performed an unrotated factor analysis which re-
vealed that ten factors fulfil the eigenvalue-greater-than-one criterion and that at least
three factors are needed to explain a variance of more than 50%. Therefore, we con-
cluded that there is no significant common-method bias (cf. Podsakoff & Organ,
1986).
D.3.4 Data analysis
We decided to use SEM as method for data analysis due to its ability to incorporate
latent constructs (Byrne, 2010) and to estimate the relationships of multiple interrelat-
ed dependence relationships simultaneously (Hair, Jr., Black, Babin, Anderson, & Tat-
ham, 2006). Furthermore, we chose the partial least squares (PLS) estimation tech-
nique as it provides latent variables scores and can estimate complex models with
many latent and manifest variables (Henseler, Ringle, & Sinkovics, 2009). We applied
smartPLS 2.0 M3 (Ringle, Wende, & Will, 2005) for the analysis of our path model.
We followed the two-step approach proposed by Anderson & Gerbing (1988). It con-
sists of the development of the measurement model and its validation and the actual
testing of the structural model. Both steps are described in more detail in the following
sections.
236 Quality Management Practices for Business Services
from a Buyer‟s Perspective
D.3.4.1 Measurement model
We tested reliability and validity of our measurement model following suggestions by
Henseler et al. (2009).
Scale reliability: We tested reliability on the indicator as well as on the construct level.
On the construct level we calculated Cronbach‟s alpha (Cronbach, 1951) as well as
composite reliability (Werts, Linn, & Jöreskog, 1974). Both reliability coefficients can
be interpreted in the same way using a threshold value of above 0.7 (Henseler et al.,
2009). All constructs showed values well above this limit. On the item level, Hulland
(1999) suggests that the loadings of all indicators with their respective constructs
should exceed 0.707 to ensure that at least half of the variance in the manifest variable
is shared. The squared correlation equals the variance explained, where 0.707 ≈ √0.5.
As can be seen from Table D- 5 in the appendix all retained items fulfilled this re-
quirement.
Content validity: As described in Section D.3, we attempted to ensure content validity
by conducting an exploratory case study investigating how buying companies manage
the quality of externally sourced BS. Based on the results of the case study, we then
developed a prototype questionnaire on basis of an extensive review of the literature
related to QM and service quality. Most of the items regarding QM practices stemmed
from earlier research in QM such as Saraph et al. (1989) while items related to service
quality and customer satisfaction were mainly adopted from studies in service quality
(for example, Parasuraman, Zeithaml, & Berry, 1988). Finally, we pilot-tested this
questionnaire with practitioners and members of academia. Their feedback led to the
refinement of the original items whose final version can be seen in Table D- 5 in the
appendix.
Convergent validity and unidimensionality: Convergent validity can be assessed by the
unidimensionality of indicators relating to a construct (Henseler et al., 2009). To test
unidimensionality, we conducted an exploratory factor analysis using principal com-
ponent extraction with varimax rotation. The exploratory factor analysis was separate-
ly performed for the constructs related to QM practices and the performance measures.
On basis of an examination of the eigenvalues the proposed seven constructs for QM
practices and four performance constructs were affirmed. Afterwards, the standardized
factor loadings and communalities of all items were checked which resulted in the
elimination of several indicators of the constructs provider involvement, quality in-
formation and service design. For each final scale pertaining to QM practices and per-
Quality Management Practices for Business Services from a Buyer‟s Perspective
237
formance measures, Cronbach‟s alpha was recalculated (Cronbach, 1951, see Table D-
5). All items then passed the suggested threshold value of 0.7 (Nunnally & Bernstein,
1994). The retained items with their standardized factor loadings on the respective
scale and corresponding t-values can be seen in Table D- 5 in the appendix.
Discriminant validity: According to Henseler et al. (2009), discriminant validity can
be evaluated by using two measures in PLS path modelling: First, the Fornell-Larcker
criterion (Fornell & Larcker, 1981) which postulates that a latent variable should share
more variance with its assigned indicators than with any other latent construct. We
checked the Fornell-Larcker criterion by testing if the average variance extracted
(AVE) of each construct is greater than any squared correlation with the other factors
(Fornell & Larcker, 1981). Second, the loading of each indicator should be greater
than all of its cross-loadings (Chin, 1998; Henseler et al., 2009), i.e. indicators for one
construct should not load too much on indicators from a different construct. As Table
D- 2 shows all constructs and indicators are in conformance with these criteria and
thus indicating sufficient discriminant validity.
Predictive validity: Predictive (Nunnally & Bernstein, 1994) or criterion-related validi-
ty (Diamantopoulos & Siguaw, 2006) is concerned with how well the scales of a sur-
vey instrument are associated with an independent measure of the relevant criterion
(Sila & Ebrahimpour, 2005). Therefore, in this study, the seven QM practices have
predictive validity if they are positively correlated with the performance measures as
hypothesized in the research framework.
Quality Management Practices for Business Services from a Buyer‟s Perspective
238
Table D- 2: Results of testing the measurement model
Construct Indicator Cronbach’s
alpha
Composite
reliability
Factor
loadings
Average
variance
extracted (AVE)
Squared latent variable
correlations
Fornell-Larcker
criterion
Minimum Maximum
Top management support
Mtsup 1 .944 .964
.957 .899 .29 .55 Fulfilled
Mtsup 2 .949
Mtsup 3 .938
Workforce management
Workmt 1 .899 .926 .779 .713 .35 .60 Fulfilled
Workmt 2 .841
Workmt 3 .850
Workmt 4 .863
Workmt 5 .888
Provider involvement
Proinv 2 .909 .943 .937 .846 .23 .62 Fulfilled
Proinv 3 .928
Proinv 4 .894
Quality information
Qinf 1 .901 .939 .880 .792 .29 .66 Fulfilled
Qinf 2 .894
Qinf 3 .902
Qinf 5 .884
Service design Des 1 .846 .896 .783 .682 .34 .53 Fulfilled
Des 2 .835
Des 4 .833
Des 5 .850
Customer involvement
Cuinv 1 .907 .928 .815 .682 .36 .64 Fulfilled
Cuinv 2 .839
Cuinv 3 .827
Cuinv 4 .835
Cuinv 5 .816
Cuinv 6 .821
Process management
Promt 1 .879 .917 .881 .734 .27 .66 Fulfilled
Promt 2 .843
Promt 3 .872
Promt 4 .829
Quality Management Practices for Business Services from a Buyer‟s Perspective
239
Construct Indicator Cronbach’s
alpha
Composite
reliability
Factor
loadings
Average
variance
extracted (AVE)
Squared latent variable
correlations
Fornell-Larcker
criterion
Minimum Maximum
Service quality Servq 1 .960 .968 .928 .834 .42 .70 Fulfilled
Servq 2 .908
Servq 3 .925
Servq 4 .852
Servq 5 .925
Servq 6 .939
Cost efficiency Cost 1 .907 .942 .910 .843 .23 .56 Fulfilled
Cost 2 .920
Cost 3 .925
Satisfaction Sat 1 .916 .941 .901 .799 .32 .70 Fulfilled
Sat 2 .900
Sat 3 .887
Sat 3 .887
Value of QM Value 1 .939 .961 .953 .891 .32 .55 Fulfilled
Value 2 .947
Value 3 .932
Suggested values n/a ≥.70 (Nunnally & Bernstein, 1994)
≥.60 (Henseler et al., 2009)
≥.70 (Nunnally & Bernstein, 1994)
≥.50 (Fornell & Larcker, 1981)
n/a n/a Squared correlation coefficients < AVE (Fornell & Larcker, 1981)
240 Quality Management Practices for Business Services
from a Buyer‟s Perspective
D.3.4.2 Structural model
After having established confidence in the measurement model, we tested the structur-
al model, i.e. the hypothesized relationships between the proposed constructs, using
smartPLS (Ringle et al., 2005). The results regarding the relationships between QM
practices and performance factors are depicted in Figure D- 2. All proposed hypothe-
ses and parameters to be estimated are supported.
In structural models using PLS, an overall goodness of fit index cannot be reported as
the main objective is prediction versus fit (Ulaga & Eggert, 2006). However, Henseler
et al. (2009) suggests four tests for assessing structural models using PLS which are
shortly described in the following. Their results are given in Figure D- 2 and in Table
D- 3 respectively.
First, we estimated the path coefficients using the bootstrap procedure to obtain t-
statistics for the evaluation of the significance of parameters (Tenenhaus, Esposito
Vinzi, Chatelin, & Lauro, 2005; Efron & Tibshiran, 1986). All path coefficients are
directed as hypothesized and significant. The results are shown in Figure D- 2 provid-
ing empirical support all of our hypotheses.
Second, we checked the coefficient of determination (R2) of the latent endogeneous
variables as the most essential criterion for quality of a structural model (Henseler et
al., 2009). Chin (1998) considers R2 values of 0.67, 0.33 and 0.19 in structural models
using PLS as substantial, moderate or weak respectively. Thus, in our model, the coef-
ficient for process management, service quality and satisfaction are substantial, while
the coefficient for cost efficiency and value of QM can be regarded as moderate. No
endogeneous variable possesses a weak value of R2. In total, the model is able to ex-
plain 70% of the variance of service equality.
Third, in addition to the R2 as a criterion for predictive relevance, we also calculated
Stone-Geisser‟s Q2 (Geisser, 1975; Stone, 1974) which posits that a model must be
able to provide a prediction of the indicators of the endogenous latent variable
(Henseler et al., 2009). A value of Q2 greater than zero for a certain endogenous latent
variable indicates the model has predictive relevance, whereas values smaller than zero
represent a lack of predictive relevance (Chin, 1998). Furthermore, positive values for
the relative impact of predictive relevance of 0.02, 0.15 and 0.35 indicate a small, me-
dium or large predictive relevance of a certain latent variable (Henseler et al., 2009).
Quality Management Practices for Business Services from a Buyer‟s Perspective
241
The results of our calculation of Stone-Geisser‟s Q2 in Table D- 3 reveal that all values
are greater than zero. Therefore, the model possesses predictive relevance.
Fourth, we calculated the size of each effect in the path model by means of Cohen‟s f2
(Cohen, 1988). The effect size is the relative increase of the proportion of variance of
the endogenous latent variable that remains unexplained (Henseler et al., 2009). Cohen
(1988) deems values of 0.02, 0.15 and 0.35 as signifying small, medium and large ef-
fects. The results for Cohen‟s f2 for each of the hypothesized paths will be further dis-
cussed in the next section.
Quality Management Practices for Business Services from a Buyer‟s Perspective
242
Figure D- 2: Structural model
a +/- = direction of path coefficient (positive/negative); *** = p<.01; ** = p<.05; *=p<.1; t= t-value; level of effect size (Cohen, 1988): Large effect: f
2≥.35, medium effect: : f
2≥.15, small effect: :
f2≥.02; level of relative predictive relevance (Henseler et al., 2009): Large: q
2≥.35, medium: q
2≥.15, small: q
2≥.02
Quality
infor-mation
(R2=0.554)
Provider
involve-ment
(R2=0.589)
Top mgt.
support
Customer
involve-ment
(R2=0.550)
H1
+ .195***
t=3.19
f2=.052
q2=.035
Process
mgt.(R2=0.736)
Workforce
mgt.(R2=0.532)
Service
design(R2=0.529)
Service
quality(R2=0.700)
Satis-
faction(R2=0.751)
Cost
efficiency(R2=0.562)
Value of
quality mgt.(R2=0.606)
H2
+ .729***
t=19.02
H4
+.742***
t=18.42
H5
+ .774***
t=20.41
H6
+ .625***
t=10.09
f2=.534
q2=.373
H7
+ .446***
t=6.89
f2=.271
q2=.157
H8
+ .408***
t=7.44
f2=.159
q2=.063
H9
+ .317***
t=4.68
f2=.076
q2=.037
H20
+ .301***
t=4.95
f2=.107
q2=.179
H17
+ .553***
t=10.69
f2=.444
q2=.259
H19
+.531***
t=10.07
f2=.328
q2=.293
H12
+ .102**
t=2.247
f2=.019
q2=.014
H13
+ .207***
t=2.82
f2=.029
q2=.030
H15
+ .503***
t=9.12
f2=.352
q2=.213
H14
+ .138***
t=2.35
f2=.035
q2=.030
H10
+.121***
t=3.34
f2=.028
q2=.051
H11
+ .374***
t=6.13
f2=.218
q2=.134
H3
+.077*
t=1.385
f2=.004
q2=.004
H16
+ .359***
t=6.55
f2=.179
q2=.063
H18
+ .75***
t=18.58
Quality Management Practices for Business Services from a Buyer‟s Perspective
243
Table D- 3: Results of testing the structural model
Construct Coefficient of determination (R
2)
Level of coefficient of determination (R
2)
Prediction relevance (Q
2)
Top management support
n/a n/a n/a
Workforce management .532 Moderate .373 Provider involvement .589 Moderate .497
Quality information .554 Moderate .437 Service design .529 Moderate .337
Customer involvement .550 Moderate .357
Process management .736 Substantial .553
Service quality .700 Substantial .565 Cost efficiency .562 Moderate .450
Satisfaction .751 Substantial .577 Value of QM .606 Moderate .528
Suggested values n/a Substantial: R2≥ .67
Moderate: R2≥ .33
Weak: R2≥ .19
(Chin, 1998)
Q2>0
(Geisser, 1975; Stone, 1974)
D.4 Discussion
The primary objective of our study was to investigate the relationships amongst QM
practices for BS and their impact on organizational performance from a buying com-
pany‟s perspective. We attempted to reach this purpose by developing and testing a
structural model which was based on a comprehensive review of relevant literature.
The findings as a whole suggest that the adoption of QM practices for BS is positively
related to organizational performance of the buying company. The various relation-
ships amongst the QM practices and between QM practices and performance are short-
ly discussed in the following.
Supporting findings from previous studies examining QM from the perspective of a
goods provider (for example, Flynn et al., 1995; Forza & Filippini, 1998; Kaynak,
2003; Kaynak & Hartley, 2008), top management support represents a crucial compo-
nent of QM for BS. It is positively, directly and strongly related to workforce man-
agement and customer involvement, whereas its direct relationship to provider in-
volvement and service design is less strong. In case of service design it is significant
only at the 10% level. It may be that workforce management and customer involve-
ment are seen as more strategic QM practices which require more intense attention by
top management than provider involvement and service design. The latter two practic-
es may be regarded as more operative tasks supported or performed not by top man-
agement but by functional departments such as purchasing and QM. It may be worth-
244 Quality Management Practices for Business Services
from a Buyer‟s Perspective
while for future studies to examine which other factors exert stronger effects on sup-
plier management and service design. For example, the professionalism of purchasing
may influence the degree to which both constructs are applied in a buying company.
Workforce management is positively, directly and strongly related to quality infor-
mation. This result is in line with studies, for example, by Samson & Terziovski
(1999) and Zu et al. (2008). This means that well-trained employees who are aware of
the importance of quality of incoming BS and empowered to make decisions regarding
their quality are paramount in obtaining reliable and efficient quality information. Our
result supports the notion by Flynn et al. (1995) and Zu (Zu, 2009) that workforce
management represents an important infrastructure QM practice facilitating the im-
plementation of other core QM practices rather than possessing direct effects on organ-
izational performance.
Quality information itself appears to be a crucial ingredient for the successful adoption
of QM for externally sourced BS. It is directly and very strongly related to provider
involvement, and slightly less strongly related to service design and process manage-
ment. The important role of quality information was also established by previous stud-
ies (for example, Ahire & O‟Shaughnessy, 1998; Kaynak & Hartley, 2008; Kaynak,
2003) from the perspective of goods providers. Considering the rather large path coef-
ficients and substantial effect sizes, it seems that quality information is even more crit-
ical to successful QM for externally sourced BS than it is for QM of goods. This may
be associated to the heterogeneity and intangibility of services which – on the one
hand – make it more difficult to obtain useful quality data about them but – on the oth-
er hand – increase the demand for such information.
Provider involvement in our study is directly and positively related to process man-
agement and service quality. Our findings regarding the comparably strong influence
of provider involvement onto process management are consistent with earlier research
on QM for goods (for example, Ahire & O‟Shaughnessy, 1998; Forza & Filippini,
1998). However, results on the relationship between provider involvement and per-
formance have sometimes been mixed. Powell (1995), for instance, concluded that
closeness to suppliers is only marginally correlated to quality performance whereas
Kaynak & Hartley (2008) found direct and indirect relationships between supplier QM
and different performance measures. In our study, provider involvement is directly but
not particularly strongly related to service quality. Additionally, it may exert indirect
effects on service quality mediated by process management and on all other perfor-
mance measures via service quality as well. Provider involvement shows direct influ-
Quality Management Practices for Business Services from a Buyer‟s Perspective
245
ence on service quality. This contrasts research by Zu (2009) who only detected indi-
rect effects of supplier involvement on quality performance and thus regarded it an
infrastructure practice. Future research may further evaluate the role of provider in-
volvement as an infrastructure or core QM practice.
Flynn et al. (1995) discovered an under researched link between product design and
process management and called for its examination. We therefore included this rela-
tionship into our study and detected a positive direct relation between service design
and process management. The comparably weak connection (cf., for example, Ahire &
Dreyfus, 2000, Kaynak & Hartley, 2008) is, however, somewhat surprising consider-
ing that several authors posit that a thorough design and specification is of paramount
importance for successful purchasing of BS (for example, Jackson et al., 1995; Lind-
berg & Nordin, 2008). The strength of the relationship between service design and
process management may be affected by the specific characteristics of services which
may make the design of BS more difficult than the design of goods for buying compa-
nies. For example, professional buyers may find it more challenging to define the
specification of a business service upfront due to the fact that it is produced and con-
sumed at the same time, i.e. that it is inseparable. Therefore, common techniques
which are used by buying companies to design goods, for example, quality function
deployment or design of experiments, may not be applicable to the same extent for BS.
The link between service design and service quality is not strong either which may
mean that it is difficult for a buying company to determine what quality characteristics
become important after the service is purchased. In total, service design should be re-
garded a core practice of QM for externally sourced BS. Future research may, howev-
er, further investigate to which degree buying companies make use of efficient tech-
niques of service design in order to improve service quality.
Another notable result of our study is the analysis of the role of involvement of inter-
nal and external customers for QM for BS. Customer involvement not only exerts a
positive and direct, however rather weak, effect on service design but also strong or
medium effects on service quality and customer satisfaction. Thus, it can be regarded a
decisive core component of QM for services. This contrasts some earlier research
which either did not include customer involvement into the set of QM practices (for
example, Anderson, Rungtusanatham, Schroeder, & Devaraj, 1995; Saraph et al.,
1989) or did not detect significant direct relationships between customer involvement
and service design (for example, Flynn et al., 1995) or customer involvement and qual-
ity performance (for example, Sila & Ebrahimpour, 2005; Kaynak & Hartley, 2008).
246 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Furthermore, the direct relationships between customer involvement and performance
cast some doubt onto the classification of customer involvement to infrastructure QM
practices (Flynn et al., 1995; Zu, 2009). It may be necessary to take the object of QM
(i.e. goods vs. services) into consideration when classifying QM practices as infra-
structure or core. Customer involvement seems to be more critical for QM for services
than for goods when taking the perspective of a buying company. On the one hand,
this may be due to the supposedly lower professionalism in purchasing of services than
goods (Axelsson & Wynstra, 2002; Ellram et al., 2007; van der Valk, 2008; van der
Valk, 2007). Purchasing professionals may thus be more dependent on the input of
their internal and external customers when defining the requirements on externally
sourced services or on their feedback when evaluating their quality. On the other hand,
the fact that service production often involves the interaction between the service con-
sumer and the service provider implies a close involvement of customers if a company
strives to improve the quality of a business service. In total, customer involvement
seems to be the crucial QM practice for buying companies striving to improve the
quality of their externally sourced BS.
In our study, process management is another QM practice which is positively, directly
and comparably strongly related to service quality. This result corroborates findings in
studies such as, for example, Ahire & Dreyfus (2000), Choi & Eboch (1998) and Lee
et al. (2003) and transfers it to the perspective of companies buying BS. Due to its di-
rect relation to performance, it furthermore classifies process management as a core
practice as suggested by Flynn et al. (1995) and Zu (2009).
We also investigated the relationships among several performance measures. Service
quality appeared to be strongly positively related to satisfaction of internal and exter-
nal customers and cost efficiency. The first relationship is in line with previous studies
from service marketing (for example, Cronin, Jr. et al., 2000; Patterson & Spreng,
1997) and QM (for example, Choi & Eboch, 1998; Madu et al., 1996). It is notable,
however, that the same relationship holds when examining not only the satisfaction of
a buying company‟s external customers but also of its internal customers (for example,
internal departments consuming externally purchased BS) as it was done in our study.
It is important to include these two types of satisfaction in research on QM for exter-
nally sourced BS as they can be either consumed internally within the buying company
or transferred to its external customers (Wynstra et al., 2006; van der Valk et al., 2009;
van der Valk, 2007).
Quality Management Practices for Business Services from a Buyer‟s Perspective
247
The strong link between service quality and cost efficiency is somewhat surprising as
one could argue that higher levels of service quality of externally sourced BS are usu-
ally related to higher acquisition costs for the buying company (Kim & Kim, 2010).
However, our study suggests that companies can lower purchase prices, cost of quality
failures or operating costs by increasing the quality of externally purchased BS
through measures in the area of QM for services. It thus transfers Crosby‟s notion that
– in the longer run – quality is for free (Crosby, 1979) from the perspective of a manu-
facturer of goods to the one of a company buying BS. Increased cost efficiency and
satisfaction are positively related to the value of QM for BS. Overall, the benefits of
QM of a company buying BS thus outweigh the sacrifices for its implementation and
maintenance.
D.5 Conclusion
This study wanted to find out what the relationships between QM practices for exter-
nally sourced BS are and how they are related to measures of organizational perfor-
mance. We found out that QM practices for these services are highly interrelated vali-
dating the interdependence of QM practices. Furthermore, we could detect direct rela-
tionships between QM practices (provider and customer involvement, process man-
agement, services design) and service quality as well as between customer involve-
ment and customer satisfaction.
D.5.1 Managerial implications
From a managerial perspective, key findings from our study can be summarized as
follows:
This study shows that QM for externally sourced BS is associated with positive
effects such as enhanced service quality resulting in higher customer satisfaction
and reduced costs. The positive effects of QM for BS are perceived to exceed the
costs of its implementation and maintenance. It may therefore be a profitable in-
vestment for buying companies to expand their efforts in QM for services.
When a buying company considers the implementation of QM for externally
sourced BS, it should take an integrative perspective. Our study has shown that
the various practices are highly interrelated. Therefore, implementing only a lim-
ited set of QM practices may not lead to the expected positive results. However,
248 Quality Management Practices for Business Services
from a Buyer‟s Perspective
our findings suggest that a sequential launch including all the QM practices for
externally sourced BS may realize their full potential. For example, buying com-
panies may first secure the full support by top management and introduce the
practices which were identified as infrastructure instruments in our study, i.e.
workforce management and quality information. Employees who are well trained
in QM for BS and an efficient system of quality data will then alleviate the intro-
duction of the other core practices, i.e. supplier and customer involvement, ser-
vice design and process management.
Our study has shown that customer involvement is a key practice of QM for ex-
ternally sourced BS. This also means that functional borders, for example, be-
tween purchasing and departments consuming BS within buying companies
should be reduced when purchasing BS. Rather, purchasers and quality managers
should work very closely together with their internal or external customers in
cross-functional teams in order to determine their requirements and obtain regu-
lar feedback regarding the quality of externally sourced BS.
Before taking further action to implement QM for externally sourced BS, buying
companies may want to assess its current status in their organization. The refined
version of the questionnaire developed in this study may be used by practitioners
to measure the current realization of QM for services and/or benchmark it with
other companies.
From the perspective of a service provider, our findings suggest that companies
offering a business service should – if possible – thoroughly involve the service
consumer (for example, the internal department of the buying company consum-
ing the service or the external customer of the buying company) into the service
production and delivery process. Furthermore, processes for quality approval and
evaluation should be made as easy as possible for the buying company. For ex-
ample, service providers could regularly survey the satisfaction of customers and
report these data to the purchasing responsibles or they could offer easy-to-use
electronic systems for the approval of delivered services by the buying company.
D.5.2 Theoretical implications
Our study also provides several theoretical insights into the QM for BS from a buying
company‟s perspective.
Quality Management Practices for Business Services from a Buyer‟s Perspective
249
First, we analyzed QM from the perspective of a buying company, i.e. from a different
perspective than the one taken by most of the previous studies, and for BS, i.e. for a
different object of QM than of many other studies in QM. Examining research ques-
tions from a different angle is important for increasing the generalizability and exten-
sion of previous findings (Tsang & Kwan, 1999). Overall, our results suggest that QM
has positive effects on organizational performance when it is implemented for exter-
nally sourced BS. We thus transfer and corroborate findings of earlier studies which
found positive relationships between the adoption of QM for outgoing goods by manu-
facturing companies (for example, Dow et al., 1999; Cua et al., 2001; Kaynak & Hart-
ley, 2008; Sila & Ebrahimpour, 2005; White, 1996).
Second, we examined the direct and indirect relationships amongst QM practices, be-
tween these practices and several selected measures of organizational performance and
among the performance measures themselves. The analysis of this complex network of
relationships – among other things – reveals that top management support, workforce
management and quality information have positive direct links to other QM practices.
They can thus be considered crucial infrastructure QM practices when regarding QM
for BS from a buying company‟s perspective. Provider involvement, process manage-
ment, service design and customer involvement, however, exert positive influence on
performance directly. Thus, they are important core practices for QM for BS. As this
classification of QM practices contrasts some previous analyses for QM of goods (cf.
Flynn et al., 1995; Zu, 2009), we suggest that future research should take the object
(i.e. goods or services) of QM into account when assigning practices to these catego-
ries.
Third, our results underline the crucial role of customer involvement for QM of exter-
nally sourced BS from a buying company‟s perspective. Earlier research did some-
times not include relationships with customers into the set of QM practices or could
not detect positive direct effects of customer involvement on firm performance when
investigating QM for goods (for example, Anderson et al., 1995; Saraph et al., 1989;
Flynn et al., 1995; Sila & Ebrahimpour, 2005; Kaynak & Hartley, 2008). By contrast,
our study revealed a strong and positive relationship between customer involvement
and service quality as well as customer satisfaction. Therefore, customer involvement
seems to be a crucial ingredient of QM for BS and should not be left out in future re-
search.
Fourth, our investigation of the relationships amongst performance measures indicates
their interrelation. It seems that a buying company can not only increase the satisfac-
250 Quality Management Practices for Business Services
from a Buyer‟s Perspective
tion of internal and external customers by enhancing the quality of externally sourced
BS by means of QM but it can also increase cost efficiency, i.e. lower operating costs.
Overall, these benefits of QM practices for externally sourced BS were perceived to
outweigh the sacrifices of their implementation and maintenance which was measured
by the construct of value of QM. As these results contribute to a more detailed exami-
nation of the effects of QM we suggest to include several performance measures and
the examination of their relations into future research on QM.
D.5.3 Limitations and future research
There are several limitations to this empirical study which correspond to the cross-
sectional design of this study, the usage of perceptional, self-reported data and the ne-
glect of potential contingency factors affecting the adoption of QM practices for exter-
nally sourced BS.
We used cross-sectional data to test our hypotheses which captured the situation at
buying companies at one point in time (Fink, 1995). QM practices and firm perfor-
mance are, however, constructs which may be dynamic in nature. Thus, their devel-
opment may change over time and might be better examined over an extended period
(Lakhal, 2009). In order to observe the implementation of QM for externally sourced
BS and its complexities or barriers, future research may therefore use longitudinal
studies.
Furthermore, our results are based on perceptional, self-reported rather than objective,
publicly available archival information. We decided to use perceptional data on basis
of three grounds: First, our case studies performed before the survey showed that buy-
ing companies do not yet regularly collect data regarding their QM for externally
sourced BS or the performance measures used in this study. Second, objective or ar-
chival data are often at the wrong level of aggregation, out-of-date or unavailable for
small and medium companies (Boyd, Dess, & Rasheed, 1993). As 49.6% of compa-
nies which responded to our survey have less than 1,000 employees and 47.2% realize
a turnover of less than 250 million Euros, we concluded that objective data may not be
available to an acceptable degree. We thus opted to use perceptional data in order to
maintain a comparably large sample. Third, in order to make more definite statements
about QM and its effect on organizational performance, we refused to use archival data
on global organizational outcomes, such as market share, profitability, stock price etc.
According to Hackman & Wageman (1995), these can be the result of various influen-
Quality Management Practices for Business Services from a Buyer‟s Perspective
251
tial factors and may therefore not directly relate to QM practices alone. Future research
should nevertheless attempt to include more objective data into the examination of QM
practices for externally sourced BS.
In addition, we did not include contingency factors into our structural model and thus
did not test their potential moderating effects. Contingency theory posits that an organ-
ization must be aligned with its environment to achieve optimal performance (Don-
aldson, 2001; Lawrence & Lorsch, 1969). A contingency perspective of QM implies
that QM practices must be consistent with situational factors (Das et al., 2000). Previ-
ous research on QM for goods from a manufacturer‟s perspective has identified situa-
tional factors such as competitive intensity (for example, Das et al., 2000; Powell,
1995), organizational size (for example, (Cua et al., 2001) or type of industry (for ex-
ample, Nilsson et al., 2001; Quazi, Jemangin, Kit, & Kian, 1998; Woon, 2000) as im-
portant parameters influencing the relationship between QM and firm performance.
Such variables may, however, also affect the amplitude or even the existence of the
relationships we detected in our study. For example, it may be that larger firms or
manufacturing companies have an advantage when implementing QM for externally
sourced BS due to the better availability of resources or the existing know-how in QM
for goods. Thus, these organizations may reap more benefits from the realization of
QM for BS. It is therefore a worthwhile task for future research to further examine the
effect of such factors on our research model.
Finally, our study examined the QM for all business services which were externally
purchased by the participating companies. We did not make any differentiation be-
tween, for example, services which represent a high or a low portion of a company‟s
purchasing volume or whose quality failure represents a critical or non-critical risk to
the buying company. Future research may examine how such factors affect the adop-
tion of QM in more detail, for example, by conducting case studies.
Despite these limitations, we are confident that our study presents a useful starting
point for further research into QM for BS from a buying company‟s perspective.
252 Quality Management Practices for Business Services
from a Buyer‟s Perspective
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Quality Management Practices for Business Services from a Buyer‟s Perspective
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Appendices of paper D
Table D- 4: Selected empirical studies supporting the proposed hypotheses
Study Method /
Sample /
Level of analysis /
Manufacturing vs. service industries /
Countries
Proposed hypotheses
H
1
H
2
H
3
H
4
H
5
H
6
H
7
H
8
H
9
H
10
H
11
H
12
H
13
H
14
H
15
H
16
H
17
H
18
H
19
H
20
Ahire & Dreyfus (2000)
Structural equation modelling / 418 / Plants / Manufacturing / US
X X X
Ahire & O‟Shaughnessy (1998)
Correlation analysis and stepwise multiple regression / 449 /
Plants / Manufacturing / US, Canada
X X X X X X X X X X X X X X
Choi & Eboch
(1998)
Structural equation modelling /
339 / Plants / Manufacturing / US
X X X
Cronin, Jr. et al. (2000)
Structural equation modelling / 1,944 / End consumers / Service / US
X X X X X
Cua et al. (2001) Multiple discriminant analysis / 163 / Plants / Manufacturing /
Germany, Italy, Japan, UK, US
X X X X
Quality Management Practices for Business Services from a Buyer‟s Perspective
265
Study Method /
Sample /
Level of analysis /
Manufacturing vs. service industries /
Countries
Proposed hypotheses
H
1
H
2
H
3
H
4
H
5
H
6
H
7
H
8
H
9
H
10
H
11
H
12
H
13
H
14
H
15
H
16
H
17
H
18
H
19
H
20
Curkovic et al. (2000)
Structural equation modelling / 526 / Plants / Manufacturing /
US
X X
Das et al. (2000) Structural equation modelling / 290 /
Companies / Manufacturing / US
X X
Dow et al. (1999) Structural equation modelling /
698 / Plants / Australia, New Zealand
X
Flynn et al. (1994) Canonical correlation analysis / 45 / Plants / Manufacturing / US
X X X X X X X X X X
Flynn et al. (1995) Path analysis / 42 / Plants / Manufacturing / US
X X X X X
Forza & Filippini (1998)
Structural equation model / 43 / Companies /
Manufacturing / France, Germany, Italy, US
X X X X X
Kaynak (2003) Structural equation modelling / 214 /
Companies / Manufacturing / US
X X X X X X X X X X X
Quality Management Practices for Business Services from a Buyer‟s Perspective
266
Study Method /
Sample /
Level of analysis /
Manufacturing vs. service industries /
Countries
Proposed hypotheses
H
1
H
2
H
3
H
4
H
5
H
6
H
7
H
8
H
9
H
10
H
11
H
12
H
13
H
14
H
15
H
16
H
17
H
18
H
19
H
20
Kaynak & Hartley (2008)
Structural equation modelling / 263 / Companies / Manufacturing /
US
X X X X X X X X X X X X
Kuo et al. (2009) Structural equation modelling / 387 /
End consumers / Service / Taiwan
X
Lee et al. (2003) Structural equation modelling /
109 / Companies / Manufacturing / US
X X
Li (1997) Path analysis / 150 / Hospitals / Service / US
X X X
Maani et al. (1994) Structural equation modelling / 184 / Plants / Manufacturing /
New Zealand
Madu et al. (1996) Correlation analysis / 165 /
Companies / Manufacturing and service / US
X X X
Nilsson et al. (2001) Structural equation modelling /
482 / Companies / Manufacturing and service /
X X
Quality Management Practices for Business Services from a Buyer‟s Perspective
267
Study Method /
Sample /
Level of analysis /
Manufacturing vs. service industries /
Countries
Proposed hypotheses
H
1
H
2
H
3
H
4
H
5
H
6
H
7
H
8
H
9
H
10
H
11
H
12
H
13
H
14
H
15
H
16
H
17
H
18
H
19
H
20
Sweden
Patterson & Spreng (1997)
Structural equation modelling / 128 / Companies /
Service / Australia
X
Quazi et al. (1998) Factor and correlation analysis / 33 /
Companies / Europe, Japan, Singapore, US, Other
X X
Samson &
Terziovski (1999)
Correlation analysis and multiple
regression analysis / 1,024 / Plants / Manufacturing / Australia, New Zealand
X X X X X X
Sila & Ebrahimpour (2005)
Structural equation modelling / 220 / Companies / Manufacturing / US
X X X X X
Zu et al. (2008) Structural equation modelling / 226 / Plants /
Manufacturing / US
X X X X X X X X
Quality Management Practices for Business Services from a Buyer‟s Perspective
268
Table D- 5: Measurement scales, items and their sources
The items marked with the symbol * were eliminated after testing the reliability values and the measurement model. The first value in parenthesis for each retained item indicates the standard-ized factor loadings obtained in the factor analysis; the second value represents the t-value resulting from testing each item‟s coefficient.
Items Description Factor
loading
(t-value)
Sources
1 QM practices
1.1 Top management support
Mtsup 1: Our top management reviews problems related to the quality of externally sourced BS in organizational top management meetings.
.957 (161.39)
Adapted from Forker et al. (1997)
Mtsup 2: Our top management sets objectives regarding the quality of externally sourced BS.
.949 (113.19)
Adapted from Forker et al. (1997) and Li (1997)
Mtsup 3: Our top management is personally involved in activities to improve the
quality of externally sourced BS.
.938
(79.48)
Adapted from Cua et al. (2001) and Sadikoglu & Zehir
(2010) 1.2 Workforce management Workmt 1: Training related to quality of services is given to the employees in our
company. .779 (25.88)
Adapted from Saraph et al. (1989), Zu (2009) and Zu et al. (2008)
Workmt 2: Our company forms teams to solve problems related to the quality of externally sourced BS.
.841 (31.28)
Adapted from Cua et al. (2001) and Fynes & Voss (2002)
Workmt 3: We give some of our employees (for example, purchasers or quality managers) clear objectives regarding the quality of externally sourced BS.
.850 (38.75)
Adapted from Black & Porter (1996)
Workmt 4: Ideas from our employees are actively used to improve the quality of
externally sourced BS.
.863
(37.96)
Adapted from Dow et al. (1999)
Workmt 5: Our company continually enhances the awareness of its employees regarding the quality of externally sourced BS.
.888 (54.96)
Adapted from Forker et al. (1997) and Saraph et al. (1989)
1.3 Provider involvement Proinv 1: * We strive to establish long-term relationships with our providers of
BS. Adapted from Flynn et al. (1994), Fynes & Voss (2002) and
Zu (2009) Proinv 2: Our company has a thorough rating system for its providers of BS. .937
(104.46)
Adapted from Zu (2009) and Zu et al. (2008)
Proinv 3: The rating of our service providers is followed by pre-defined measures. .928 (80.51)
Inspired by Das et al. (2000)
Quality Management Practices for Business Services from a Buyer‟s Perspective
269
Items Description Factor
loading (t-value)
Sources
Proinv 4: We continually audit our service providers to make sure we receive quality BS.
.894 (55.91)
Adapted from Sila & Ebrahimpour (2005)
Proinv 5: * Our service providers have an effective system for measuring the quality of the BS they sell us.
Adapted from Dow et al. (1999) and Samson & Terziovski (1999)
Proinv 6: * Our service providers are involved in our quality training. Adapted from Zu (2009) and Zu et al. (2008) Proinv 7: * Our service providers are recognized and rewarded for service quality
improvement.
Adapted from Sánchez-Rodríguez & Martínez-Lorente
(2004) Proinv 8: * Our service providers are certified for quality. Adapted from Cua et al. (2001) and Sila & Ebrahimpour
(2005)
1.4 Quality information Qinf 1: In our company, quality data (for example, error rates, complaint rates
etc.) regarding externally sourced BS are available for purchasers. .880 (38.12)
Adapted from Curkovic et al. (2000), Zu (2009) and Zu et al. (2008)
Qinf 2: In our company, quality data (for example, error rates, complaint rates etc.) regarding externally sourced BS are available for the internal requisitioner.
.894 (54.62)
Qinf 3: We regularly report data regarding the quality of externally sourced BS. .902 (65.89)
Inspired by Saraph et al. (1989)
Qinf 4: * We exchange data regarding quality of externally sourced BS with other companies.
Inspired by Curkovic et al. (2000) and Woon (2000)
Qinf 5: We use data regarding the quality of externally sourced business service to improve their quality.
.884 (57.63)
Adapted from Kaynak & Hartley (2008), Kaynak (2003) and Saraph et al. (1989)
Qinf 6: * We define the required level of service quality by means of key performance indicators or service level agreements.
Inspired by Curkovic et al. (2000) and Sila & Ebrahimpour (2005)
Qinf 7: * We benchmark the quality of our externally sourced BS. Adapted from Curkovic et al. (2000) 1.5 Service design
Des 1: In our company, multiple departments (such as purchasing, QM and internal customers) coordinate in the design process for externally sourced BS.
.783 (17.91)
Adapted from Kaynak & Hartley (2008), Kaynak (2003), Saraph et al. (1989), Zu (2009) and Zu et al. (2008)
Des 2: Our company actively involves its internal customers into the design process for externally sourced BS.
.835 (24.90)
Inspired by Powell (1995)
Des 3: * Our company actively involves its external customers into the design
process for externally sourced BS.
Des 4: We involve our service providers in the design process of our externally sourced BS.
.833 (28.47)
Inspired by Fynes & Voss (2002) and Quazi et al. (1998)
Des 5: Our specifications for externally sourced BS are clear. .850
Adapted from Sadikoglu & Zehir (2010), Saraph et al. (1989) and Sila & Ebrahimpour (2005)
Quality Management Practices for Business Services from a Buyer‟s Perspective
270
Items Description Factor
loading (t-value)
Sources
(46.60) Des 6: * We thoroughly review new externally sourced BS before they are
used. Adapted from Sadikoglu & Zehir (2010) and Kaynak &
Hartley (2008), Kaynak (2003)
1.6 Customer involvement Cuinv 1: We use the requirements of our internal customers of externally sourced
BS as basis for the definition of their quality. .815 (34.12)
Adapted from Zu (2009) and Zu et al. (2008)
Cuinv 2: We use the requirements of our external customers of externally sourced BS as basis for the definition of their quality.
.839 (38.56)
Cuinv 3: Our company analyzes the satisfaction of its internal customers of
externally sourced BS and the results are used for quality improvements.
.827
(34.42)
Inspired by Dow et al. (1999) and Nilsson et al. (2001)
Cuinv 4: Our company analyzes the satisfaction of its external customers of externally sourced BS and the results are used for quality improvements.
.835 (35.45)
Cuinv 5: Our internal customers give us feedback on the quality of externally sourced BS.
.816 (36.54)
Adapted from Cua et al. (2001), Fynes & Voss (2002), Zu (2009) and Zu et al. (2008)
Cuinv 6: Our external customers give us feedback on the quality of externally sourced BS.
.821 (34.42)
1.7 Process management Promt 1: We regularly inspect, assess, or approve the quality of our externally
sourced BS. .881 (61.30)
Inspired by Kaynak & Hartley (2008), Kaynak (2003), Quazi et al. (1998), Saraph et al. (1989)
Promt 2: We use electronic systems to inspect, assess, or approve the quality of externally sourced BS.
.843 (36.04)
Promt 3: Our company uses statistical methods to monitor the quality of
externally sourced BS.
.872
(45.98)
Adapted from Powell (1995)
Promt 4: Our company‟s processes related to the provision of externally sourced BS are documented.
.829 (31.11)
Inspired by Nilsson et al. (2001) and Samson & Terziovski (1999)
2 Performance measures
2.1 Service quality Servq 1: Our company has been able to enhance the overall quality of its
externally sourced BS by measures in the area of QM for services during the last three years.
.928 (83.85)
Inspired by Singh, Feng, & Smith (2006) and Woon (2000)
Servq 2: Our company has been able to enhance the response time of the providers of its externally sourced BS by measures in the area of QM for
services during the last three years.
.908 (45.04)
Inspired by Parasuraman, Berry, & Zeithaml (1991), Parasuraman et al. (1988), Sánchez-Rodríguez & Martínez-
Lorente (2004) and Young & Varble (1997). Servq 3: Our company has been able to enhance the know-how of the providers
of its externally sourced BS by measures in the area of QM for services during the last three years.
.925 (78.50)
Quality Management Practices for Business Services from a Buyer‟s Perspective
271
Items Description Factor
loading (t-value)
Sources
Servq 4: Our company has been able to enhance the appearance (for example, physical facilities, personal appearance) of the providers of its externally sourced BS by measures in the area of QM for services during the last three years.
.852 (35.55)
Servq 5: Our company has been able to enhance the attention and commitment of the providers of its externally sourced BS by measures in the area of QM
for services during the last three years.
.925 (66.02)
Servq 6: Our company has been able to enhance the reliability of the providers of
its externally sourced BS by measures in the area of QM for services during the last three years.
.939 (83.70)
2.2 Cost efficiency Cost 1: Our company has been able to lower the purchase prices of externally
sourced BS through measures in the area of QM for services during the last three years.
.910 (56.95)
Inspired by Curkovic et al. (2000) and Solis, Subba, Raghu-Nathan, Chen, & Pan (1998)
Cost 2: Our company has been able to lower the cost for quality failures of
externally sourced BS through measures in the area of QM for services during the last three years.
.920
(54.73)
Inspired by Dow et al. (1999), Curkovic et al. (2000), Solis
et al. (1998), Zu (2009) and Zu et al. (2008)
Cost 3: Our company has been able to lower its operating costs through measures in the area of QM for externally sourced services during the last three years.
.925 (68.04)
Inspired by Singh et al. (2006) and Solis et al. (1998)
2.3 Satisfaction Sat 1: Satisfaction of our internal customers with externally sourced BS has
increased during the last three years through measures in the area of QM for these services.
.901 (60.61)
Adapted from Zu (2009), Zu et al. (2008) and Nilsson et al. (2001)
Sat 2: Satisfaction of our external customers with externally sourced BS has
increased during the last three years through measures in the area of QM for these services.
.900
(46.57)
Sat 3: Our company has reduced the number of complaints of internal customers about the quality of externally sourced business through measures in the area of QM for these services.
.887 (45.40)
Adapted from Fynes & de Búrca (2005), Nilsson et al. (2001), Sadikoglu & Zehir (2010) and Solis et al. (1998)
Sat 4: Our company has reduced the number of complaints of external
customers about the quality of externally sourced business through measures in the area of QM for these services.
.887
(40.40)
2.4 Value of QM
Value 1: The benefits our company achieved through its measures in the area of QM for externally sourced BS exceed the sacrifices for their
.953 (110.59)
Inspired by Sila & Ebrahimpour (2005), Patterson & Spreng (1997), Patterson, Johnson, & Spreng (1997) and Kuo et al.
Quality Management Practices for Business Services from a Buyer‟s Perspective
272
Items Description Factor
loading (t-value)
Sources
implementation. (2009) Value 2: The benefits our company achieved through its measures in the area of
QM for externally sourced BS exceed the sacrifices for their maintenance.
.947 (84.23)
Value 3: Overall, our company‟s measures in the area of QM for externally sourced BS have paid off.
.932 (89.68)
Quality Management Practices for Business Services from a Buyer‟s Perspective
273
E Author's Curriculum Vitae
Name: Elmar Holschbach
Date of birth: 7th
August 1975, Paderborn, Germany
Nationality: German
EDUCATION AND WORK EXPERIENCE
since Mar. 06 Senior Consultant
Procurement Strategy & Structures
Capgemini Deutschland
GmbH
Cologne, Germany
Oct. 08 – Sep. 11 Doctoral studies in business Administration
Part-time
Thesis: 5.5 (very good)
University of St. Gallen Institute of Logistics
Management
St. Gallen, Switzerland
Oct. 04 – Oct. 05 MSc Management Research
Leyland scholarship,
Graduated with distinction
University of Oxford
Saïd Business School
Templeton College
Oxford, UK
Oct. 00 – Sep. 04 Manager Supply Marketing
Corporate Purchasing
CLAAS KGaA mbH
Harsewinkel, Germany
Jan. 01 – Apr. 01 Webmaster (IHK)
Part-time training
IHK Ostwestfalen zu
Bielefeld
(German Chamber of Trade and Industry in Bielefeld,
Germany)
274 Quality Management Practices for Business Services
from a Buyer‟s Perspective
Oct. 03 – Jul. 04 Specialized Tradesman in
Purchasing and Logistics
Part-time training
IHK Cologne
(German Chamber of Trade
and Industry in Cologne,
Germany)
Oct. 99 – Sep. 00 Auditor Internal Auditing
CLAAS KGaA mbH Harsewinkel, Germany
Oct. 96 – Nov. 99 BSc in Business Studies
Overall mark: 1.6
(Student of the year)
Dual studies with 74 weeks of
internships at CLAAS group.
Thereof:
Fachhochschule der
Wirtschaft (FHDW)
Paderborn, Germany
Jun. – Sep. 98 Internship in sales and marketing CLAAS UK Ltd.
Bury St. Edmunds, UK
Jan. – Mar. 99 Internship in sales, sales
promotion, accounts receivable,
parts
CLAAS of America, Inc.
Columbus, Indiana, USA
Jul. 95 – Apr. 96 Military service Tank battalion 2./214
Augustdorf, Germany
Jun. 86 – Jul. 95 A-level Gymnasium Theodorianum
Paderborn, Germany