INSIGHTS of Service Science, Spring 2012

INSIGHTS of Service Science, Spring 2012: 4(1)

Prof. Cheng Hsu, Senior Editor of Service Science


Manuscript Submission:

INFORMS PubsOnLine:  (Spring 2012)

Stanford Highwire (Searchable Database):


  1. Consumer Responses to Legal Music Download Services that Compete with Illegal Alternatives, by Michel Clement, Arvind Rangaswamy, and Srikant Vadali


The “Internet Generation” is notorious in their relentless push for free downloads and file sharing online. Some even seem to consider grabbing information from any public sources their birth right. This attitude has profound implications on copyright. One of the immediate consequences is the adversarial effects on, in particular, music, movie, and publication industries: Without effective protection of copyrights, these industries have been forced into abandoning, or at least transforming, their traditional business models that rely on direct sales of copies to end customers. How should the society best address this change of attitude? The authors argue that legal download services, including those which are free (e.g., Spotify), can serve as positive incentives to help conserve the respect for copyrights – and they are working. These services, according to the authors, may become “new service interventions” that could influence the mental models of consumers toward discouraging illegal file sharing. The authors apply the theories of planned behavior and cognitive dissonance to articulate hypotheses regarding how such new services would change mental models of consumers, and test the hypotheses using data from two natural field experiments at a U.S. university. This paper finds that the introduction of legal music downloading services reduces the extent of favorable attitudes toward illegal file sharing and weakens the relationship between attitude and intent, whereby favorable attitudes toward illegal file sharing do not necessarily translate into a stronger intent to engage in illegal file sharing. However, these new services also strengthen the relationship between perceived benefits of file sharing and reinforce their positive impact on intent to file share for those who engage in higher levels of illegal file sharing before using the new service. The authors suggest the society should encourage more legal download services as a way to combat the illegal alternatives.


  1. Value Transformation in the Mobile Service Ecosystem: A Study of App Store Emergence and Growth, by Rahul C. Basole and Jürgen Karla


Mobile service is a new wave of e-commerce that hits the economic arena; and mobile app stores are at the fore front of this new service industry. Anyone, for example, who uses a smartphone would know the significance of mobile apps. This industry is rapidly expanding to penetrate other sectors such as tablet computer, smart TV, and potentially anything digital, and has become a multi-billion dollar winner. While mobile service has clearly transformed retailing and many other traditional businesses, and is continuing to breed new transformation into our everyday activities (such as help make the entire cyberspace an “iWeb” tool us), the research field has not yet yielded many insightful empirical studies on its transforming impact. This paper provides an analysis of the evolving structure of the mobile service ecosystem during 2006-2010 from the perspective of value transformation.  The theoretical foundations underlying value transformation in business ecosystems, including the interconnectedness of service value co-creation, are reviewed as the basis for this analysis. It shows that four major segments – mobile platform providers, mobile network operators, mobile device manufacturers, and mobile application providers dominate the core of the mobile service ecosystem. The authors then systemically explore different platform approaches using theories of technology platforms and business ecosystems. By focusing specifically on the evolution of the mobile service ecosystem, the paper also contributes to our understanding of how and why business ecosystems emerge, evolve, and change. A comparative study of mobile app stores and their role in value co-creation substantiates these analyses.


3.      A Cointegration Model with Structure Breaks for Customer Migration Analysis, by Wei Jiang, Rong Duan, and Siu-Tong Au


Customers always pursue better deals and businesses; and companies always try to hold their customers in place. In a sense, this eternal safari game is also a power struggle based on information: Customers search for information and alternatives to improve their bargaining position, while companies strive to better understand their customers’ changing need and thereby stay ahead of the customers’ tendency to migrate. The digital age has heightened this competition for information. As customers become more restive and easier to switch, companies also enjoy the benefit of possibly having large scale, comprehensive data about their customers at their disposal. Tremendous amount of data, including CRM, marketing, and transactional databases, await exploration by statistical and data mining techniques to yield intelligence about customer migration and more. This paper addresses the “who-when-how” questions in customer migration analysis through the discovery of cause-effect relationships between the legacy and new products from large scale databases. Methods are developed to group customer spending time series data in order to find patterns that drive the declines of the legacy product and/or the increases of the new product. Measures that quantify the impacts of customer migrations and identify the migrating customers are also provided. A structure break co-integration (SBCIT) model for quantifying the strength of the cause-effect relationship is proposed. The authors submit that the SBCIT model can be solved easily and quickly with a similar computational effort of the conventional least-square regression, suitable for processing large CRM databases found in practice.


4.      Enterprise Transformation to Enable University–Industry Collaboration: A Case Study in Complexity and Usability, by Chen-Yang Cheng, Tanna Pugh, Ling Rothrock, and Vittal Prabhu


Universities routinely collaborate with industry in teaching and research.
These two sides customarily join forces in courses, student projects, or educational programs and co-ops, as well as pursue mutually beneficial research and development agendas. This university-industry collaboration can be construed as enterprise transformation, and can benefit from a new study of the topic. The authors argue that sufficient understanding of the complexity and usability of business processes determines the outcome of enterprise transformation, and cognitive-loading metrics can help understand such complexity and usability. In this paper, they develop such metrics and apply them to a particular university-industry collaboration effort and thereby illustrate how the new method may help analyze IT-driven enterprise
transformation. The need for conducting operations with and without the use
of information technology can also be evaluated this way. An evolution
methodology is proposed to help implement the best practices of enterprise
transformation for university-industry collaboration.

5.      Nonfixed Retirement Age for University Professors: Modeling Its Effects on New Faculty Hires, by Richard C. Larson and Mauricio Gomez Diaz


Many OPEC countries no longer have mandatory retirement as a national policy. This removal of mandatory retirement age clearly marks the advent of an aging
society. In many ways the new policy is inevitable, since it advantages
the economy to offset the dwindling in birth rates. However, it does also
impose tensions in certain aspects of the work force where young people are looking to replace the old. For academia, the demand for new (younger) hires could be depressed when senior faculty members prolong their work beyond the traditional retirement age. The implication could be profound at a time when the nation needs to renew its core knowledge base, and with it her competitiveness, by increasing the supply of cutting edge new scholars. However, calculating the effect on new hires by prolonged faculty service is not a simple matter, since it involves the intricate processes of teaching and research found in major universities. This paper is one of the first in the open literature that provides an in-depth analysis of this important problem, using formal models such as system dynamics verified with empirical data obtained from Massachusetts Institute of Technology. The models may be applied to individual universities, as well as being adapted for the academia as a whole. Their findings hold the promises of assisting higher education policy makers to plan for the renewal of university faculty.


  1. Value Cocreation in Service Platform Business Models, by Anssi Smedlund


Manufacturing companies tend to congregate together around some intertwined
clusters of products. Examples include the herding of suppliers in East Asia
along the global supply chains for the information and communications
technology (ICT) industry. In these cases, the OEM/ODM such as Apple,
Samsung, and Sony become the focal companies around which some industrial
ecosystem forms for the industry. Enterprises can maneuver to leverage resources to gain on business opportunities and reap “the rich get richer” benefits of the economic scale. This is referred to by many as the platform business model. How such platform business models can be applied to service business is the subject of study in this paper. The authors present a classification of four types of service platform business models according to their logic of value co-creation. Each type is further elaborated through service cases. A central construct in this paper is a model that describes how value is co-created in services through unique combinations of the capabilities of the service supplier, customer and end-user, all enabled by flexible front-end ICT. This model, while embracing the service-dominant logic theory, is built on the basis of European literature on service innovation, and is calibrated and substantiated through the service cases analyzed in this paper. The paper uses these investigations to expose causal mechanisms between the actors in value co-creation across different service platform business models, and offers suggestions for gathering information about the core actors needed to manage services in the platform era.




Robin G. Qiu, Ph.D.
Division of Engineering and Information Science
The Pennsylvania State University
30 E. Swedesford Road, Malvern, PA 19355, USA


Fellow, Center for Service Enterprise Engineering
The Pennsylvania State University, University Park, PA  16802


Phone: 1-610-725-5313 (Office), Fax; 1-610-648-3377 (Office)

Personal Web:


Editor-in-chief, INFORMS <<Service Science>>

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