Technical knowledge and service solution superiority

It has been advocated that a key path to customer retention and customer acquisition rests in the PSF’s ability to provide superior service solutions that satisfy business customer’s need better than competitors (Hogan et al. 2011; Barr and McNeilly 2003). To provide a superior service solution that satisfies business customers’ need, PSFs need to possess technical knowledge, as shown in Figure 4.3 (Greenwood et al. 2005; Lowendahl et al 2001; Starbuck 1992). There are two underlying reasons supporting the view that the possession of technical knowledge is critical for PSFs. First, synthesising the work of Hogan et al (2011) and Cohen and Levinthal (1990), service solutions can be viewed as innovative offerings that are based on the application of technical knowledge. Second, supporting this view is the work of Von Nordenflycht (2010) who contends that the PSF’s specific expertise is the manifestation of the level of

their technical knowledge, and is the foundation of their ability to offer superior solutions to the customer.

Given that PSFs transform technical knowledge into service solutions in an effort to satisfy business customers’ needs (Von Nordenflycht 2010; Strambach 2008), some raise the point that the level of technical knowledge determines the superiority of service solutions (see also Aarikka-Stenroos and Jaakkola 2012). Further, it has been shown that technical knowledge determines a firm's capacity to create and implement new and innovative ideas (Zahra et al. 2009). Extending the argument raised by Zahra et al. (2009) into the domain of PSFs, one can adopt the view that technical knowledge increases idea generation capacity to provide customised service solutions, which are technically innovative and unique offerings in the market. Greenwood et al. (2005) argue even when a PSF duplicates a service from one customer to another customer, the service is still new for the second customer as it should be further customised based on the second customer’s specific requirements.

Within the literature two different dimensions of technical knowledge are identified, encompassing deep and broad technical knowledge (Prabhu et al. 2005). The main reason to focus on the role of deep and broad technical knowledge is that these two dimensions of technical knowledge are key determinants of providing the

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main or core service/product or new service/product (Prabhu et al. 2005; Katila and Ahuja 2002). The definition of deep technical knowledge adopted here is developed from the work of Prabhu et al. (2005) and Carlo et al. (2012). Prabhu et al. (2005) define technical knowledge as knowledge applied to useful purposes and Carlo et al. (2012) define deep knowledge as the relative quality and level of detail that a firm can leverage for distinct knowledge elements in its knowledge base. Building on the work of Carlo et al. (2012) and Prabhu et al. (2005) deep technical knowledge is defined as the degree of detail and complexity of a PSF’s expert knowledge of the technical and expertise field of their operation.

to develop the definition of broad technical knowledge the work of Carlo et al. (2012) and Prabhu et al. (2005) are used. Prabhu et al. (2005) define technical knowledge as knowledge applied to useful purposes and Carlo et al. (2012) define broad knowledge as the level of heterogeneity within its relevant knowledge base. Thus, broad technical knowledge here is defined as the degree of heterogeneity and dissimilarity of a PSF’s expert knowledge of their technical field of operation (adapted from Carlo et al. 2013; Prabhu et al. 2005). While deep and broad technical knowledge have received attention in a range of product domain settings, it has received very little attention in the service domain (except Carlo et al. 2012). However, drawing from the research in the product domain, as well as the service domain, one may adapt and apply this body of work to build the theory of deep and broad technical knowledge in PSFs’ context. The first part of the theory development in the next section (Section 4.2.3.1.1) discusses the effect of deep technical knowledge on the service solution superiority and the second part discusses the effect of broad technical knowledge (Section 4.2.3.1.2) on the service solution superiority.

4.2.3.1.1. Hypothesis 4a: Deep technical knowledge and service solution superiority

As discussed in Section 4.2.3.1, deep technical knowledge is a key component of technical knowledge, which explains the degree of depth and complexity of a PSF’s expert knowledge of their technical and expertise field of operation. Building on the work of Carlo et al. (2013) and Prabhu et al. (2005), this section examines the relationship between deep technical knowledge and service solution superiority, which their relationship is shown in Figure 4.3. Given that the concept of deep technical knowledge has rarely been examined in service context (except for Carlo et al. 2012), some literature related to the product domain research is borrowed to build the theory in PSFs context and develop the hypotheses. In the product domain, researchers have

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found deep technical knowledge has different effects on organisational outputs, such as innovation. For instance, Prabhu et al. (2005) found a positive and significant relationship between deep technical knowledge on innovation performance. In PSFs’ context, Carlo et al. (2012) report an indirect effect for deep technical knowledge on the level of innovation in the form of process, services, and IT platforms. Others, however, raise issues related to the negative impact of deep technical knowledge such as a lack of idea generation in innovation (Zhou and Li 2012). Given the similarities between service solutions and innovation outlined in Section 4.2.3.1, the innovation literature is considered useful to build the theory in PSFs’ context for this study.

In extending the literature on the effect of deep technical knowledge on innovation into the service solution domain, it is expected that deep technical knowledge positively influences the PSF’s service solution superiority up to a certain level. There are several reasons for expecting an initial increase in the effect of deep technical knowledge on the service solution superiority. First, deep technical knowledge is limited to a specific area, it is easily disseminated and internalised in the PSF, thus the probability of finding and selecting the best technical knowledge to solve customers’ problem are increased (see De Luca and Atuahene-Gima 2007 for a similar argument in the product domain). Second, deep technical knowledge increases the familiarity of the PSF with the specific details of technical knowledge in the field and facilitates the PSFs’ ability to select the best pieces of knowledge that can be useful in crafting solutions to solve customer problems (Zhou and Li 2012; Katila and Ahuja 2002). Third, deep technical knowledge decreases the effect of trial and error by increasing the expertise to solve more complex problems and implement new ideas to solve customer problems in less time (Katz and Du Preez 2008; Prabhu et al. 2005). As such, building on the prior literature (e.g., Katz and Du Preez 2008; Laursen and Salter 2006; Prabhu et al. 2005; Zahra and George 2002) deep technical knowledge facilitates synthesising new ideas and increases the ability to apply technical knowledge in service solution provision process. In this sense, it is expected that the PSF who possesses deep technical knowledge will be more likely to provide superior service solutions.

However, beyond a certain point (e.g., level), an excessive level of deep technical knowledge may be detrimental to the service solution superiority (see Zhou and Li 2012 for similar argument). An over-emphasis or focus on deep technical knowledge can lessen the PSF’s capacity to explore knowledge in other domains that might be helpful to design and develop superior service solutions. The underlying reason for this argument is that some pieces of knowledge that might be helpful to solve customer problems can be outside of the PSFs’ technical domain (see Laursen and Salter 2006 for the same argument). Further, an excessive level of deep technical

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knowledge may increase organisational inertia (Zhou and Li 2012; Tripsas and Gavetti 2000). In this sense, fewer new ideas are developed or come into the PSF, and consequently fewer alternative service solutions are designed (see Zahra and George 2002 for a similar argument). Further, because of inertia, access to greater technical knowledge in other domains is abandoned (Zhou and Li 2012). As such, an excessive level of deep technical knowledge can lessen the PSF’s capacity to explore and use new ideas to create and deliver superior service solutions. Consequently, it is argued here that there is an optimal level of deep technical knowledge to drive the superiority of service solutions, in which below the optimal level the relationship is positive and above which the relationship is negative. Therefore;

H4a: Deep technical knowledge has an inverted U-shaped relationship with the PSFs’ service solution superiority.

4.2.3.1.2. Hypothesis 4b: Broad technical knowledge and service solution superiority

Broad technical knowledge is another key component of technical knowledge. Building on the work of Carlo et al. (2012) and Prabhu et al. (2005) as discussed in Section 4.2.3.1, broad technical knowledge is defined as the degree of heterogeneity and dissimilarity of a PSF’s expert knowledge of their technical field of operation. Building on previous research, this section discusses the relationship between broad technical knowledge and service solution superiority as shown in Figure 4.3. Similar to deep technical knowledge, the literature from both the product and service domain is adopted to build the theory and develop the hypotheses on the relationship between broad technical knowledge and service solution superiority in PSF context. Adopting the literature from the product domain, especially that with similar characteristics to professional services is undertaken because the concept of broad technical knowledge has rarely been examined in service contexts. The research on broad technical knowledge in the product domain provides partial support for the contention that broad technical knowledge improves manufactures’ ability to innovate better than competitors (see Prabhu et al. 2005). In the service context, Carlo et al. (2012) did not find the direct effect for broad knowledge on the level of innovation (e.g., referred to as base, process or service). The comparison between the findings in product domain and service domain reveals some level of inconsistency on the effect of broad technical knowledge of innovation outcomes. The work of Prabhu et al. (2005) and Carlo et al. (2012) are comparable because both studies focus on industries which are well known for being knowledge driven (IT services and the pharmaceutical industry).

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To reconcile the contradictory findings on the effect of broad technical knowledge on innovation, which identifies positive and negative effects of broad technical knowledge helps to discuss this relationship. For example, learning and understanding many concepts included in broad technical knowledge that enters the firm is difficult and challenging (Zahra et al. 2000; Bohn 1994). Further, acquiring broad technical knowledge is time consuming, expensive, and unreliable (Katila and Ahuja 2002; Schilling and Green 2011) and distracting (Prabhu et al. 2005). However, broad technical knowledge brings new ideas into the firm that can be applied in developing diverse functions or activities in the firm (see, De Luca and Atuahene-Gima 2007). In the product domain, it is argued that broad technical knowledge increases idea generation, which may enhance the novelty of an offering (De Luca and Atuahene-Gima 2007; Prabhu et al. 2005). However, an excessive focus on broad technical knowledge may also be detrimental to the success of an offering. The underlying reason to justify this contention is that the high degree of heterogeneity of technical knowledge elements hampers recombination of knowledge and transferring knowledge across the firm (see, De Luca and Atuahene-Gima 2007). Therefore, applying excessive broad technical knowledge may lead to providing a service solution that cannot satisfy business customers’ need.

In extending the literature on the broad technical knowledge into the service solution domain, it is expected that the relationship between broad technical knowledge and service solution superiority is positive up to a certain level. Building on the work of Laursen and Salter (2006), Tailor and Greve (2006), Carlo et al. (2012), and Yli Renko et al. (2001), some benefits of broad technical knowledge in the PSF are identified here. First, broad technical knowledge improves the number of ideas a PSF may generate to design a solution. Second, broad technical knowledge increases the superiority of the service solution or enhances the innovative features of the service solution by enriching the firm’s knowledge base and combining new and different pieces of technical knowledge. The consequences of these benefits for the PSF increase the PSFs’ ability to offer different types of service solutions (e.g., an accounting firm that offers auditing solutions) to respond to different customer needs in different market segments (see the contention raised by Carlo et al. 2012; Prabhu et al. 2005). As such, it is expected that the positive effect of broad technical knowledge on service solution superiority increases.

While the above discussion illustrates the positive aspects of broad technical knowledge, it is also argued that an excessive level of broad technical knowledge may result in decreasing the superiority of service solutions. There are several reasons to support this argument. First, acquiring broad technical knowledge is time consuming,

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expensive, and unreliable, which are significant disadvantages of having too much focus on broad technical knowledge (Schilling and Green 2011; Katila and Ahuja 2002). Thus, while broad technical knowledge brings new ideas, new ideas may not come at an appropriate time, or the new ideas might not be applicable (Laursen and Salter 2006). Second, as broad technical knowledge brings more new ideas into the PSF, it is possible that a poor new idea is chosen to solve the problem. Poor ideas might be chosen because the PSF is not familiar with the new technical knowledge (for similar argument see De Luca and Atuahene-Gima 2007). Therefore, the probability of failure of the service solution increases. Third, broad technical knowledge can cause distractions within the PSF (see Prabhu et al. 2005 for the same argument about product innovation), because learning many concepts or skills can be difficult and developing an understanding of them is more challenging (Zahra et al. 2002; Bohn, 1994). Thus, at a specific point or level a greater focus on broad knowledge might be hazardous to the service solution superiority, and one may expect to see declines in the relationship between broad technical knowledge and service solution superiority. Consequently, it is argued here, that there is an optimal level of broad technical knowledge for service solution provision, in which below the optimal level the relationship is positive and above which the relationship is negative. Therefore;

H4b: Broad technical knowledge has an inverted U-shaped relationship with the PSFs’ service solution superiority.