What academic research tell us about service

BY Roland T. Rust AND Carol Miu

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WHAT ACADEMIC RESEARCH
TELLS US ABOUT SERVICE
A computing-driven revolution is under way in the global economy guided by the principle that every business must become a service business in order to survive. echnology has revolutionized the way that companies perform service, enabling the development of long-term individualized relationships with customers. Advancements in computing have allowed companies to improve both profits and financial accountability by providing high quality, personalized service more easily and affordably than ever before. IT not only lowers the cost of service, it creates avenues to enhance revenue through service. Gone are the days of standardization, mass production, and mass marketing. Academic research has revealed that the service sector is now dominant in every developed economy. The goods sector is shrinking as a proportion of the overall economy; and as goods increasingly become commodities, service is becoming the key differentiator even in the goods sector. Thus, to compete effectively, all companies must become service companies.
For over a century, technological development has driven an economic shift from a focus on goods to a focus on service. Innovation is often associated with greater efficiency in the manufacturing of goods, namely decreasing costs through faster and cheaper production and transportation. However, new technologies also have service-related consequences. Businesses can gain information about their customers, competitors, and the product market and use this information to separate

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from the competition by providing services desirable to customers. Consequently, technological advances have led businesses to focus more on service and give service a more prominent role in the economy.
The rise of service in the economy has been reflected by an explosion of academic research on

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