The determinants of service capability in small manufacturing firms
The service component of manufacturing activities has largely been neglected. Small firms are of particular interest because services are often seen as especially critical in establishing their competitive advantage. Drawing on data from face-to-face interviews with the owner-managers of Finnish and UK small printing firms and their employees and professional print buyers, this study addresses the earlier neglect by offering a theorised analysis of service capability in printing firms, that is the role and scope of the services within the manufacturing context as mediated through customer-firm interaction. Although the interviewees perceived services as being important, the findings show that their role and character varied among firms, depending on the type of product, customer characteristics and other factors including national differences. However, quality, price and delivery always had to be taken into account in service provision. The conceptualisations of, and importance attached to, these elements varied and often contradicted each other in practice. A concept, 'the printer's triangle', was valuable in analyzing the multiple perspectives and in showing the differing strategies employed in service provision when quality, price, delivery and other factors were included. In some instances, long-term customer relations were crucial to service delivery. In others, product type and infrequent interaction with customers accompanied differing service forms. UK firms stressed the importance of cost efficiency and flexible labour strategies while Finnish firms relied more on self managing staff and the latest technology in delivering services. Innovative products were especially important in developing added value services in Finland. However, most firms in the study offered products and services where short delivery times and competitive prices rather than added value services were important. A key strategy used by professional buyers was the 'supplier pool', which combined long-term supplier relations with competition between suppliers and downward pressures on prices. The findings and theorization show services as being integral to printing but subject to variations in managerial strategies, internal operational constraints, market and customer characteristics and national differences. The broader implications for small manufacturing firms, service and quality theorisation are outlined with suggestions for further research.