Customer knowledge and CCSP

The relational and customised nature of service solutions requires PSFs to comprehensively identify the customer needs and preferences (Lowendahl 2005; Empson 2001). The underlying rationale for this claim is seen in the work of Menguc et al. (2013) and Day (1994), who argues that firms should improve their customer knowledge and identify customer needs. Foss et al (2011) also support this claim by arguing that the application of customer knowledge may result in benefits for the customer by providing services and/or products that satisfy their needs. In particular, when a service firm learns about the customer and provides them with what they need, the customer responds by taking different actions towards the service firm, such as cooperating with the service firm (see Foss et al (2011). Extending these arguments to the PSF context with their specific characteristics such as, extensive interaction with customers and highly customised service offerings (Jaakkola and Halinen 2006; Løwendahl 2005; Maister 1993), the importance of customer knowledge appears to be twofold. First, focusing on interaction characteristics of PSF, providing a superior

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service solution involves extensive CCSP, in which the PSF and the customer need to cooperate to provide the solution (Aarikka-Stenroos and Jaakkola 2012). To enhance cooperation, the PSF should understand customer’s business deeply (Miller et al. 2002). Second, focusing on the customisation nature of service solution, a service solution should be customised to the specific needs of the customer (Nordin and Kowalkowski 2010). Therefore, the PSF should have enough knowledge about the business customers’ needs and requirements to cooperate with them and customise the solution to those needs (Miller et al. 2002).

As shown in Figure 4.3, both deep and broad customer knowledge underpin a PSF’s extent to cooperate with customers (see Arnold et al. 2010 for similar arguments). In a general sense, both deep and broad customer knowledge positively influence a firm's capacity to possess related knowledge to current customers and knowledge about new customers (Zahra and George 2002; Van Wijk et al. 2001) to adapt to changes (Danneels 2008). Specifically, in the cooperative and interactive relationship that characterises the PSFs, both deep and broad customer knowledge create advantages for the PSF. The underlying reason for this argument is that deep and broad customer knowledge allows the firm to identify or recognise more opportunities and pursue more secure and favourable opportunities (Gargiulo and Benassi 2000).

In this study, deep customer knowledge is the degree of detail and complexity of customer knowledge held by the PSF (Arnold et al. 2010). Broad customer knowledge is the degree of heterogeneity and dissimilarity of customer knowledge held by the PSF (Arnold et al. 2010). For example, specifically focusing on both deep and broad customer knowledge in the service context, Arnold et al. (2011) claim that broad customer knowledge improves the service firm’s ability to identify the problem and deep knowledge decreases the confusion in the innovation process. Thus, they conclude that both deep and broad customer knowledge work independently and have independent effects on service firms’ incremental and radical innovation performance.

4.2.3.2.1. Hypothesis 5a: Deep customer knowledge and CCSP

Building on the contention proposed by Arnold et al. (2011), it is argued here that deep and broad customer knowledge have independent and differential effects on CCSP. Given the relational nature of CCSP and the importance of CCSP to develop superior service solution in PSF context (Jaakkola and Halinen 2006; Løwendahl 2005; Maister 1993), customer knowledge is critical to develop the relationship with customers (Arnold et al. 2011; Day 1984). Deep customer knowledge improves CCSP, because it increases the familiarity of the PSF with the customers’ business, which enhances the

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PSF understanding of customers and their needs and preferences (Eggert et al. 2014; Arnold et al. 2010). The high level of customer knowledge facilitates customisation of the service solutions, which happens through cooperation (Miller et al. 2002), because the PSF understands the complexity of the customer’s problem and is able to find the solution which suits the customer’s business requirement. Moreover, a higher level of deep customer knowledge facilitates goal setting and improves the outcome of cooperation, because the PSF has detailed information about customer constraints and obligations. Furthermore, as a result of deep customer knowledge, joint problem solving and joint decision making through cooperation can be facilitated, because the PSF is fully aware of the resources and capabilities of the customer. In this sense, PSFs’ ability to cooperate with customers increases, because deep knowledge about the customers and their business decreases the communication gap between customer and the PSF and cooperation is improved (see comparable argument in Lovelock and Wirtz 2011). Therefore;

H5a: Deep customer knowledge is positively related the CCSP.

4.2.3.2.2. Hypothesis 5b: Broad customer knowledge and CCSP

Given the high velocity of change in the markets (Kumar and Christodoulopoulou 2014; Engelen et al. 2014; O’Cass and Sok 2013; Probert et al. 2013; Day 2011; Prabhu et al. 2005), some believe having broad knowledge increases the adaptability and flexibility of the firm to respond to changes (Prabhu et al. 2005). The underlying reason for this contention is broad knowledge decreases inertia inside the firm (Tripsas and Gavetti 2000). Inertia refers to avoiding change or avoiding taking action (Tripsas and Gavetti 2000). Given that CCSP is dynamic in nature (Brodie et al. 2011), broad customer knowledge positively affects it, by bringing in greater diversity of ideas about the customers’ needs and preferences (see De Luca and Atuahene-Gima 2007).

Broad customer knowledge affects the PSFs’ ability to develop new routines and processes in CCSP that may attract both existing and new customers (see, Christensen 1997). The underlying literature supporting this contention is the work of Kim et al. (2013) and Arnold et al. (2011) who argue that the application of broad knowledge results in having a customer-centred firm. Building on the argument raised by Kim et al. (2013) and Arnold et al. (2011), it is argued here that broad customer knowledge enhances the PSFs’ CCSP by broadening their understanding of customer needs and identify potential opportunities to cooperate (e.g., for example if the trend in customer needs is changing). In this sense, a PSF can identify more opportunities to cooperate with customers and offer them what satisfy their business requirement. Building on

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previous research (Kim et al. 2013; Laursen and Salter 2006; Gargiulo and Benassi 2000), the argument advanced here is that a PSF with broad customer knowledge has a greater potential to recombine different pieces of their customer knowledge to enhance joint decision making and joint goal settings. The underlying rationale for this argument is that diverse customer knowledge gives the PSF more holistic insight to set more viable objectives. The broad range of opportunities resulting from broad customer knowledge is expected to increase the PSF’s ability to mobilise the customer, because there are more viable and favourable options to evaluate and consider. Therefore;

H5b: Broad customer knowledge is positively related to CCSP.