Advances in Service Network Analysis

Noel Scott, Eric Laws

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780415686648
• eBook ISBN: 9781317995579
• Topic: Business
• Subtopic: Business General
• Index: Business

Advances in Service Network Analysis examines advances in the management and analysis of networks of organizations in service industries. In recent years recognition of the significance of inter-organizational networks for the provision of complex services, for example at tourist destinations, has stimulated discussion of numerous issues of theoretical and practical significance. These topics include governance, collaboration and partnerships between organizations of varying scale, sophistication and expertise, concern about leadership and trust in the management of service networks, and their overall contribution to social capital development in regions, sectors and in emergent economies.

This book was originally published as a special issue of The Service Industries Journal.

Advances in service networks research

Noel Scott^a and Eric Laws^b

^aSchool of Tourism, The University of Queensland, Brisbane, QLD 4072, Australia;^b James Cook University, Cairns, QLD 4878, Australia

Networks are an important area of study for the services industries. The guest editors of this volume contend that networks are indeed a fundamental feature of services – services intangibility makes service providers heavily dependent on the recommendations of others to direct customers to a particular business; makes acquisition of knowledge about customers and competitors more difficult and often leads to exchange of information through knowledge networks. Fluctuations in services demand are perhaps more difficult to deal with as the ‘product’ cannot be stockpiled, but one strategy to deal with this is to work within a referral network to cater to demand peaks. Services require people to be engaged in their production. This leads to an increased proportion of smaller firms in the service industries because scaling up volume is more difficult with people involved. These are just a few of the reasons why networks in the service industries are important. This introduction to the special issue on advances in service network research concludes that firstly, many of the concepts of central concern for service researchers, especially those interested in inter-organisational relationships, are related to concepts that have been developed from, and studied using, the network perspective. Secondly, there is a need to move to the use of more quantitative techniques for network analysis and lastly, recent developments in network research show much promise in the use of complex systems mathematical techniques to simulate and model networks and the effect of interventions. Thus it is possible to provide suggestions as to how a network may evolve over time and inform those involved within networks as to the relative advantages of alternative modes of action. Overall this collection of papers indicates that there are significant opportunities for further research in this emergent field of study.

Introduction

Are networks an important area of study for the services industries? The editors of this volume contend that networks are indeed a fundamental feature of services. Services are less tangible in nature than manufactured goods or agricultural products and therefore are heavily dependent on recommendations of others to direct customers to a particular business. This intangibility also makes acquisition of knowledge about customers and competitors more difficult and often leads to exchange of information through knowledge networks. They are subject to fluctuations in demand that are perhaps more difficult to deal with as the ‘product’ cannot be stockpiled. One strategy to deal with this issue is to work within a referral network to cater to demand peaks. Services require people to be engaged in their production. This leads to an increased proportion of smaller firms in the service industries because scaling up volume is more difficult with people involved. These are just a few of the reasons why networks in the service industries are important. In this paper, we examine the history of the study of inter-organisational networks, discuss particular research areas where networks have been found to be a useful concept and illustrate this with examples from this volume and other prior literature of tourism and the service industries. Overall this collection of papers indicates that there are significant opportunities for further research in this emergent field of study.

History of network studies

The origin of network thinking in social theory has been attributed to Simmel’s (1908) fundamental distinction between ‘groups’ (defined by some membership criterion) and ‘webs of affiliation’ (linked through specific types of connections). By highlighting the critical role of the position of actors in ‘webs of affiliation’, he laid the foundations for social network analysis (Grabher, 2006, p. 164). From the sociological and anthropological points of view, networks form part of the structural tradition where researchers hypothesise that variations in the pattern of relationships surrounding a focal actor affects the behaviour of that actor and that correspondingly, actors also consciously manipulate situations to create desired structures in their relationships (Stokowski, 1992).

Today, network analysis provides an analytical framework for the discussion of theories of society and globalisation encouraged by a tendency towards alliances and linkages across organisations (Pavlovich, 2001; Thrift, 1996). In business and economics, networks represent a recent organisational paradigm, based upon the competencies-based theories of the firm, where relationships shape and constrain organisational performance (Tremblay, 1998). This theoretical approach argues that organisations evolve according to the capabilities they can leverage from the external environment. In other words, a firm’s performance is not only dependent upon the resources of the firm itself, but also upon those of other firms and the nature of their relationships between them (Wilkinson & Young, 2002). This system of related firms is viewed as a network comprising an architecture of nodes and interconnected relationships where the network structure is strongly correlated to function (Watts & Strogatz, 1998). It is particularly this feature which is significant in the creation and delivery of complex, fast changing services such as tourism whether at the scale of an entire industry or at the smaller scale of competing business clusters, as many of the papers in this volume demonstrate.

Two approaches to the concept of a network may be discerned; a network may be a sensitising metaphor (a purely descriptive label given to an activity such as a networking meeting), or a conceptual representation of social structure and how it is manifest based on theorising of social interactions. In this paper, network organisations are ‘an organisational form characterised by repetitive exchanges among semi-autonomous organisations that rely on trust and embedded social relationships to protect transactions and reduce their costs’ (Borgatti & Foster, 2003, p. 995). We may consider a range of inter-organisational networks from formal structured alliances, partnerships and joint ventures to informal information gathering, referral and support networks. Major dimensions of networks are actors (or nodes), linkages, relationships and structural properties as is shown in Table 1.

A number of structural properties of networks have been described in the literature and these are commonly provided as output from network software programs. Network size is a basic indicator of interest and measures the number of direct ties between actors, which may represent a surrogate for the degree of integration in a network. Haythornthwaite (1996) discusses five characteristics that network analysts use to examine an actor’s network:

Table 1. Dimensions of networks and their definition.

Dimensions of networks	Definition
Actors	The sets of persons, objects or events for which a network is defined
Linkages	The links or ties between nodes or actors
Relationships	Specific types of linkages between actors
Structural properties	These are properties of networks for which quantitative measures have been developed

Source: After Mitchell (1969).

• Cohesion: grouping actors according to strong common relationships with each other.

• Structural equivalence: grouping actors according to similarity in relations with others.

• Prominence: indicating who is ‘in charge’.

• Range: indicating the extent of an actor’s network.

• Brokerage: indicating bridging connections to other networks.

Many of the papers in this volume apply network approaches to the tourism sector. Tourism has a preponderance of very small (micro) businesses such as guest houses or restaurants staffed by family members or one or two employees, with consequent limits on the time and money available for the proprietor to solve problems or develop new markets. This leads to a reliance on informal networks of friends, relatives and acquaintances in acquiring knowledge and skills (such as undertaking to develop a new website), or on formal marketing networks for tasks such as promotion of their business overseas. Similarly, some firms in the service industries such as those involved in provision of legal advice rely on loose networks of affiliated experts (barristers, solicitors, professional experts) to meet customer needs (Pilling & Aab, 1994). Provider–provider relationships also contribute to effective service delivery in settings where service providers must work interdependently to accomplish their collective task (Gittell, 2002). In tourism, these networks may be organised around industry associations such as Hotel Associations or Convention and Visitor Bureaux. Zehrner and Raich (this volume) explore the application of general network research to characteristics of the tourism industry. While many of the examples in this volume are drawn from the tourism sector, it is argued that a similar situation will be found in many other service sectors.

Networks of services businesses rely on trust and embedded relationships. Some evidence for this assertion is found in an Australian government study of the prevalence of formal networks in Australia across economic sectors. Around 44% of all formal networks involved the services sector, while manufacturing provided 49% and the primary sector only 8%. The larger percentage of manufacturing networks in the Australian study is attributed to the greater average size of these businesses who responded to the study, as larger manufacturing businesses are more likely to be involved in formal networks In this study, tourism was the sector providing the greatest number of services networks (Bickerdyke, 1996).

Network studies in services

Despite the seeming importance of networks in the service industries, a review of the leading services journals (Akehurst, 2008, p. 11) finds some mention of networks (Eisingerich & Bell, 2008; Tyler, Stanley, & Brady, 2006) but very little use of quantitative network analysis methods. It appears that in the service literature an organisational network is seen primarily as a metaphor, with few papers regarding networks as a conceptual representation of social structure or seeking to provide quantitative measures of network characteristics (Freeman, Cray, & Sandwell, 2007). One use of the network concept in services has been to study supply chains and alliances. In a study of supply chains, investment in the building of strong relationships is found to be a key antecedent for adopting e-business in travel agencies (Bigné, Aldás, & Andreu, 2008) while O’Farrell and Wood (1999) examine the evolution of such strategic alliances and von Friedrichs Grangsjo and Gummesson (2006) examines the networks between competitors in the hotel sector.

Supply chains or networks of suppliers are also a prominent topic in the volume. Huang, Chen, Song and Zhang (this volume) consider competition strategies in a tourism supply chain network, which originated from actor-network theory, consisting of three sectors: theme parks, accommodation providers and tour operators. They use the perspective of game theory to examine competition strategies within these sectors. Pyo (this volume) uses the concept of a tourism chain to provide performance measurement of network efficiency. A tourism chain is a pattern in the way tourists interact with a destination. Pyo’s study develops a performance index for a tourism chain utilising fuzzy set theory and then uses this model to examine the effectiveness of various management strategies in improving this index. Brás, Costa and Buhalis (this volume) examine the Bairrada Wine Route in Portugal considering it as a network of actors. They discuss the implementation of communication tools and the internal organisation needed to develop regional competitiveness.

While the use of formal network analysis is rare in services, many of the concepts used in network studies are also found in the services literature. Examples of such concepts are social capital (Mayere & Vinot, 1993), network position (Kleijnen, Lievens, de Ruyter, & Wetzels, 2009), network governance and cooperation (Chang & Wang, 2008), social identity and support (Rosenbaum, Ward, Walker, & Ostrom, 2007), exchange of information and knowledge management, innovation (Camison, 2008; Crosno, Rinaldo, Black, & Kelley, 2009; Mas-Verdú, 2007), customer word of mouth (Bansal & Voyer, 2000; Bryson & Wellington, 2003) and networks as representations of dynamic complex systems (Boojihawon, 2007). Network analysis techniques have also been used for analysis of citations in service research journals (Pilkington & Chai, 2008).

Inter-organisational networks

Within the tourism literature, the use of network concepts appears logical and delivers a number of useful outcomes for the analysis of tourism destinations and organisations, as many of the papers in this volume demonstrate. Tourism is a networked industry where loose clusters of organisations within a destination, as well as networks of cooperative and competitive organisations linking destinations, cooperate and compete in dynamic evolution. The concept of a network and the techniques of network analysis provide a means of conceptualising, visualising and analysing these complex sets of relationships. They provide a method for simplifying and communicating these relationships and so can be useful in promoting effective collaboration within destinations. Network analysis allows the identification of critical junctures in destination networks that cross functional, hierarchical or geographic boundaries.

The papers in this special volume discuss networks primarily in terms of inter-organisational networks. In recent years, recognition of the significance of inter-organisational networks for the provision of complex services has stimulated discussion of numerous issues of theoretical and practical significance. These topics include governance, collaboration and partnerships between organisations of varying scale, sophistication and expertise, concern about leadership and trust in the management of service networks, and their overall contribution to social capital development in regions, sectors and in emergent economies. Inter-organisational networks have also been examined for their apparent ability to adapt rapidly to changing external circumstances and are considered to have adaptive and emergent properties. The fol...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• 1. Advances in service networks research
• 2. A comparative analysis of quantity and price competitions in tourism supply chain networks for package holidays
• 3. The centrality of service organizations and their leisure networks
• 4. Network analysis and wine routes: the case of the Bairrada Wine Route
• 5. Important ‘ingredients’ for successful tourism/protected area partnerships: partners’ policy recommendations
• 6. Knowledge networks in the tourism sector of the Bournemouth, Poole, and Christchurch conurbation: preliminary analysis
• 7. Measuring tourism chain performance
• 8. Applying a lifecycle perspective to explain tourism network development
• 9. Unintended consequences in the evolution of affiliate marketing networks: a complexity approach
• 10. The effects of network embeddedness on service innovation performance
• 11. Knowledge networks of innovative businesses: an explorative study in the region of Ingolstadt
• 12. Knowledge transfer in a tourism destination: the effects of a network structure
• Index