Productivity as a competitive edge of a service firm: Theoretical analysis and a case study of the Finnish banking industry

Esa Viitamo

Research output: ThesisDoctoral ThesisMonograph

Abstract

In the wake of the ‘new economy’, the productivity of services gains a growing interest in research, business management and industrial policy. Based on earlier theoretical analyses and new insights, this thesis contributes to the synthetized economic framework for service productivity. Its theoretical part develops further the integrative view between the macroeconomic and the socio-economic regimes of service productivity. The specific contribution of the thesis is called the value creation approach (VCA). It examines the relation between technology and productivity in a market-based interaction by a service firm and its client. VCA highlights that the principal goal of the service firm is to enhance the value of the firm through productivity. Service productivity is composed of scale-efficiency and effectiveness. The growth and the mode of the service productivity depends on a firm’s technology. The value creation approach provides a descriptive framework for the analysis of productivity, which is then supplemented with an explanatory framework. This framework consists of theories and approaches which characterize intangible technology of the service firm through the more tangible dimensions of strategy and organization. The literatures on strategic management and organizational design are particularly relevant here. The analysis shows that the resource-based and the structuralist views can be used as an integrated framework to examine service strategy. Through the inter-linkages between technology, resources, and strategy the integrated framework highlights the determinants of service productivity. Organization theory and transaction cost economics suggest that organization is an integral part of service technology, which needs to be aligned with the strategy of the service firm. The theoretical arguments advanced in the thesis are illustrated via a comparative case study of the Finnish universal banking industry. The case study consists of both secondary and primary data. The former (industry studies, reviews, statistics etc.) is used to analyse specific aspects of the technology and the corporate goals in the banking industry. The findings indicate that the descriptive VCA offers a coherent and workable framework for the analysis and the measurement of service productivity. The interviews in the case banks Nordea and Svenska Handelsbanken suggest that universal banks have clear differences in their productive regimes – a concept adopted in this thesis to refer to the ‘managerial perception’ of how scale-efficiency and effectiveness are balanced in business operations. Nordea’s regime is based on the scaleefficiency of banking processes and products whereas Svenska Handelsbanken’s regime draws predominantly on the effectiveness of the service offerings.
Translated title of the contributionTuottavuus palveluyrityksen kilpailuetuna - teoreettinen tarkastelu ja sovellutus Suomen pankkitoimialaan
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Wallenius, Hannele, Supervising Professor
  • Toivonen, Marja, Thesis Advisor
Publisher
Print ISBNs978-952-60-4638-9
Electronic ISBNs978-952-60-4639-6
Publication statusPublished - 2012
MoE publication typeG4 Doctoral dissertation (monograph)

Keywords

  • services
  • productivity
  • value-creation
  • scale-efficiency
  • effectiveness
  • banking industry
  • service productivity

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