Abstract
Numerous opportunities and challenges exist for service organizations and their customers concerning knowledge-based economy along the effects of information technologies. Knowledge-based economy can impact on management of quality services in the companies.
The purpose of the current report is to look at some of these influences. The study aspires to elicit the enormous prospects obtained by players in the service sector, especially in areas of value, co-creation and communication.
At the same time, the report reveals various problems that face managers as a result of the poor quality provided by services providers.
The value of this report consists of revealing the logical links between transformations in the society, changes in the service sector, and improvements in the management of quality service.
The report will highlight the increasing importance of service quality management within the knowledge-based economy in the comparison to the industrial economy.
Net-working and collaboration, constant development, and value co-creation are factors that determine realization of sustainable competitive advantage through service quality management. A desktop review literature is the basis of this report.
The effort dedicated to the improvement of management of service quality and the value of managers in service quality management within service organizations is analyzed in the conclusion of the report.
Introduction
Knowledge-based economies are witnessing tremendous changes in management of service quality as a result of information technology and Internet, having arrived into the market. When service organizations communicate directly to customers, networks that are crucial to dissemination of new types of services are created.
The purpose of this report is to reveal the impact of knowledge-based economy on management of service quality within organizations as well as the major tests and chances faced by providers in quality service management.
The function of developing service quality which is attributed to the management to develop service management process within the confines of knowledge-based economy has constantly generated a lot of debate.
The report brings out the influence of the knowledge-based economy on the service quality management through recognizing logical links between transformations in the society, service, and service quality management.
Numerous opportunities and challenges exist for service organizations and their customers because of a combination of knowledge-based economy and influence of information Communication and value co-creation offer positive prospects to come while serious problems are posed by the need for managers to provide quality services.
There has been a change in business operations as a result of fast growth in the use of information and communication technology within society. Information technology is made up of various components including computers, hardware, software, telecommunications, and the ensuing technologies.
This technology can be measured through the stock of applications that organizations have (Ruiz-Mercader et al. 2006). Information and communication technology includes the use of computers, networks, and other equipments and software that process and transmit data (Plumb & Zamfir, 2009).
Exploitation of information and communication technologies requires skills and competence. Growth of the knowledge society has amplified demand for competences (Plumb & Zamfir, 2009). Societies have witnessed a significant change in structure and in ways of accessing information (Plumb & Zamfir, 2009).
Consequently, the service sector has witnessed new challenges as methods of doing business change.
Increased service-value networks within high value areas have resulted in surfacing of high-tech services (Qiu 2008). High-tech services include information outsourcing, online sharing of information and knowledge, and demand for innovations consulting like automated business.
Electronic services are excellent types of service for the knowledge-based society and economy, contributing heavily to general productivity and development. Conventional service providers, such as travel agencies, have established service-value networks intended at achieving competitive advantage (Qiu 2008).
This need has stemmed from their dependence on extremely extensive public information infrastructures and complex services systems meant to gratifying their international customers’ needs. Delivery of knowledge-based services is reacting to explicit customer demands through extremely educated and informed workers.
This is achieved through offering and delivering customized value-added answers and relations (Dubosson & Fragniere 2008).
Changes in Conceptions on Service Quality Management
The determinant factor in ways changes in the way service organizations are managed is the knowledge-based economy. Service quality is a basic problem for service organization managers. In the knowledge-based economy, there is an increase in Service quality management.
According to Yoon and Ekinci (2003), provision of quality services is among the most difficult lasting strategies for business set up. According to Paton and McLaughlin (2008), large organizations sell or procure services on an international scale order since they have established corporation with numerous stakeholders globally.
When there is integration of customer knowledge into the operation of the organization, it is possible to understand the needs of the customer fully. This helps the incorporation of the link and contribution of capital as well as boosting satisfaction of the customer.
Consequently, service quality management may be a major factor for the triumph of service organizations.
Service-dominant logic is the basis of service quality management transformations of within the knowledge-based society. Service-dominant logic portrays service as a process while services were portrayed as units of output in the goods-dominant logic (Vargo & Lusch, 2004; Vargo &Lusch, 2008).
According to Lusch et al. (2006), this new approach is responsive and centered on customer needs.
This approach has different effects on the management of services. It envisages ultimate co-creation of value due to connections between the service organization and prospective customers, and joint business between them and other associates (Lusch et al. 2006).
According to Vargo et al. (2008: 148), it is imperative to acquire Knowledge and skills if one is to gain competitive advantage in service-dominant logic. The process of value co-creation involves every member (Lusch et al. 2006).
The assessment of value-in-use helps the customer to co-creates and determine value of service offered (Plumb & Zamfir, 2009). Lusch et al. (2006), asserts that a firm can only acceptable value proposition if the customer is involved in the value co-creation.
Vargo and Lusch (2008) argue that alterations of philosophies on value creation have consequence on service organizations and their clients.
Figure 1 Value co-creation in service-dominant logic
Source: Vargo and Lusch (2008:257)
Within the knowledge-based economy, these changes about service, value creation and services management seem to control actions in the service quality management. The growth and rising acceptance of information and communication technology has caused changes to business processes.
A case in point is the formation of e-business due to the application of information and communication in business processes (Plumb & Zamfir, 2009). Competency in rapport determines the feat of the inter-organizational coalitions and their capability to associate and to create value.
Networks within service organizations could be strengthened through better knowledge. This could end up impacting on the outcome of such connections (Eikebrokk & Olsen 2007). Fuentelsaz et al. (2002: 303), argues that fundamental endeavors must be prepared in the route of learning those activities that are creators of value.
Support should be sought with the purpose of seeking to support and promote them so as to sustainably create value.
According to Fuentelsaz et al. (2002), knowledge-based economy is endowed with unique features that make it possible electronically create value and in so doing offers different ways of doing business compared to conventional methods.
However varied the types of services provision are, open networks link people. Management this fact has to be taken into account.
Service quality management in both theory and practice is of great significance within knowledge-based economy. Lovelock (1991), suggests that a rise in competition encourages consequential competitive differentiation in the service sector.
This differentiation is based on the quality of services to customers. Global financial crisis have created powerful adjustments to management service quality. Because of erosion of purchasing power, customers are more selective when choosing services.
They settle for services that would give them value for money in terms of quality and price. Current economic crisis resulted in reduced demand for services, especially non-vital services like restaurants and theatres.
For the reason mentioned above, service quality has long stopped being a market differentiation but rather an essential survival component for the service providers.
Perceived value satisfaction, trust, and loyalty are usually linked to quality of service. To illustration, Cronin and Taylor (1992) undertook a study in which they concluded that perceived service quality improved levels of satisfaction.
They also discovered that increased levels of perceived satisfaction increased the desire to purchase. According to Bei and Shang (2006), a service organization has put forward comparatively better perceived qualities and mainly those important to customers to do better than its competitors and thus gain competitive advantages.
According to Härtel et al. (2008: 24), customer satisfaction is linked to affective reactions generated when one come across a service. A customer’s perception of the success of the result is also related to satisfaction.
According to Hsu (2008), the connection between customer loyalty and perceived quality is acquiescent to customer satisfaction. Customer dissatisfaction is as a result of customers not meeting their expectations. This is as opposed to good experiences that result in customer satisfaction Kim et al. (2008).
Managers can adopt a higher standard of service quality than the customers’ deserved expectations so as to avoid customer dissatisfaction (Yoon and Ekinci, 2003). Managers should aim at improving service quality and customer satisfaction as well as perceived customer value.
Customer satisfaction may dwindle as a result of ignoring customer value. Repeat business may also reduce due to the same reason. Kim et al. (2008) proposes a holistic technique that incorporate enhancement of service value enhancement if an organization is serious about improving service quality and customer satisfaction
Customer satisfaction is even more vital regarding electronic services since networks permit knowledge sharing between customers. In the case of service providers, a dissatisfied customer may spread negative publicity to probable customers when he is exposed to low level of service quality than he or she expected.
This contrary to conventional settings where this danger is minimal (Hsu 2008).Therefore, online service providers must ensure that they have a full understanding of factors that influence online customer satisfaction (Plumb & Zamfir, 2009). Customer satisfaction, loyalty, and perceived value are boosted by trust.
Customers who are not in a position to physically inspect the quality of a service they want normally have high level of doubt as regarding the outcome of the purchase. They do not trust that they will get the equivalent of their expectations.
According to Hsu (2008), levels of perceived risk reduce with increasing levels of trust. The production, exchange and analysis of information is made possible through enabling providers and clients to scrutinize, assess, and negotiate the conditions of their relationship (Plumb & Zamfir, 2009).
Therefore, it is imperative to maintain good information channels so as to enable sustainable interaction and networking of people and technology (Blomberg 2008: 213).
A full understanding of a customers’ perception and evaluation of the service quality of an online service provider is crucial for the successful implementation of superior service quality. Hsu (2008) suggests several areas that when improved may have significant impact within an online service organization.
The exact areas include; improved customer service, accurate order fulfillment, increased Web site attractiveness, and on-time delivery. Value co-creation is established on the principle of capability to acquire knowledge about other members in the service system.
According to Blomberg (2008: 221), the capacity to offer extremely proficient and useful service is improved through gathering information on partners operations, providers, and customers.
Where this is the case, service quality should be approximately equal to or higher than the desired expectation to improve perceived quality or customer satisfaction (Yoon & Ekinci 2003: 20).
A superior way of assessing service quality and customer satisfaction is by use of an expectation scale together with general satisfaction and service quality. This would offer more legitimate information and advance a managers’ decision making (Yoon & Ekinci 2003).
Practical Implications
It is hard to make constructive generalizations regarding the quality management of service organizations because of multiplicity of service.
New business surroundings have recently embraced sophisticated information and communication technologies, increased globalization of trade, increased automation, and rapid technological innovations (Plumb & Zamfir, 2009).
According to Qiu (2008), service sector has progressed from traditional labour intensive industry to sources of innovation, partnership, and value co-creation. These factors are crucial for managing service.
Knowledge is the fundamental of competitive advantage within the knowledge based economy. It is also the heart of innovations in service organizations and originates from making sense of data and transformation of information.
Consequently, it is crucial for clients and managers of service organizations to have information as it allows them to make proper, rational, and quick decisions. A rational decision-making process is shaped by the pace of information exchange, the ease of access to information, and the potential to look for and store of information.
Large quantities of information may not necessarily translate into a smooth decision-making process because the bulk of information may be irrelevant. Therefore, effective management of information is vital to ensure that the value of information is taken into account (Dubosson & Fragniere 2008).
When people perceive information as being valuable, their response is immediate. The immediate response causes an increase in the ability to innovate, adaptability, and flexibility to market dynamics.
Information and communication technologies advancement has resulted in improved inter-organizational cooperation and communication as well as cooperation and communication between organizations and their customers.
This has eased global services delivery and thus facilitates globalization of services and opening up of international markets. The result is increased profits for service organizations that are now able to compete with top-notch opponents (Cunningham et al. 2004: 421).
According to Anderson et al. (2008), information may be an important tool for managers. Managers may appeal to particular clients or even enact diverse co-production processes through redesigning the concept of service organizations.
The service revolution is different from the industrial revolution as it encourages value as opposed to material. This is a manifestation of sustainable underpinning for the knowledge-based economy (Chan & Hsu 2009).
Service-dominant logic is founded on variation of the prototype of value delivery to value propositions and of value-added to value co-creation (Vargo & Lusch, 2004; Vargo & Lusch, 2008). According to Chan and Hsu (2009), increase of internet-based economic activities result in novel value propositions and value co-creation.
These originate from three main sources: increase of digital relations between organizations and clients, the accumulation of fresh digital relations, and the interrelation of layers of digital relations across and along a person’s and an organization’s life cycle tasks.
Thus, because networks combine clients and value-oriented organizations, their application allows service organizations to provide quality services since (Plumb & Zamfir, 2009).
Customer needs may be customized to be in tune with flexibility and adaptability of services by employing information and communication technologies. Competitive services may be fostered through effective integration of new technologies in the service process.
This may occur as a result of active support of growth tachniques related to innovation, partnership, and value co-creation.
Given that perception of service quality by customers is mostly dependent on the relations between the service provider and the customer, knowledge sharing through networks could improve these relations and thus increase customer satisfaction and loyalty.
Conclusions
Service quality management is greatly undergoing change as a result of Knowledge-based economy. This economy is not only knowledge-driven, but relies on constant development of people and also entails deep network collaboration.
The economy also involves value co-creation geared towards achievement of sustainable competitive advantage. Despite the many opportunities enjoyed by service organizations and their customers within the knowledge-based economy, there are challenges posed by stringent requirements regarding the quality of provided.
The main opportunities related to solutions delivery include: communication, intense network cooperation, value co-creation, and customized value-added services (Plumb & Zamfir, 2009).
There are various challenges in the service organizations such as changes in client demand for service quality, competences necessary for proper exploitation of information and communication technologies, and the requirement for acquisition of skill and development.
Another challenge is the need to transform traditional service organizations into contemporary service organizations. Recent financial crisis has shrunk opportunities and amplified problems in the service organizations.
Investments for innovation my help in resolving the challenges brought by financial crisis. Within the service sector, innovations may positively influence service quality and customer satisfaction.
The conclusion defends the devotion of effort aimed at raising the service quality management standards. The conclusion is important to service organization managers who are working in highly sensitive area similar to the service quality management.
There is need to conduct extensive studies in the area of service quality management so as to recognize and assess definite facets of managing service quality for diverse circumstance of service organizations and for diverse categories of services provided within the knowledge-based economy.
Studies in this field could also test the conclusions laid down in this report. This may possibly be achieved by questioning service organization managers and then contrasting the information gathered to the conclusions made in the current report.
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