Academic journal article Interdisciplinary Journal of Information, Knowledge and Management

Social Capital and Knowledge Transfer in New Service Development: The Front/back Office Perspective

Academic journal article Interdisciplinary Journal of Information, Knowledge and Management

Social Capital and Knowledge Transfer in New Service Development: The Front/back Office Perspective

Article excerpt

Introduction

In most major developed countries, the added value of services accounts for over 70% of the GDP (in 2012, the percentages for the U.S.A, France and Germany are respectively 79.7%, 79.8% and 71.1%), while China is lagging behind with a rate of only 44.6% in 2012. The development of China's services must rely on the proliferation of service innovation on a wide scale. This effort will involve identifying customer's needs, introducing new services, and improving management models. The success of new service development (NSD) is affected by the organization and structure of service enterprises. One of the primary determining factors is knowledge transfer between front office and back offices.

The separation of front and back offices makes it difficult for the offices to sympathize with each other in NSD. There exist significant differences between the front and back offices with regards to labor intensity, personnel quality, task focus, and other areas that result in a knowledge gap. It can be difficult for front office staff to translate valuable experience into effective input required for NSD. Without this input it is difficult to properly develop new services that meet customer needs.

Studies show that, although the essence of innovation is knowledge creation (Shu, 2007), knowledge transfer plays a significant role in innovation performance (Sarin & Mcdermott, 2003). Tao, Wei, and Wang (2007) divide the financial innovation process into several stages from the perspective of knowledge transfer. This provides for the analysis of the level of influence of organizational structure on knowledge transfer in financial enterprises. Additional studies have shown that while social capital plays a critical part in knowledge transfer, front/back office interaction in service organizations introduces complex influences on the knowledge transfer process in NSD.

This paper conducts a multi-case study on regional banking institutions designed to explore the following two questions: (1) what is the state of front/back office linkage in NSD, and (2) how do organizational contacts between front and back offices influence knowledge transfer in NSD?

Literature and Framework

New Service Development

In the late 1980s the concept of new service development (NSD) was described based on the study of new product development, which defines NSD as the process of developing a new service product by the service provider (Johne & Storey, 1998). In addition, Menor and Roth (2008) believe that NSD is not simply the development of the new service product but also the development of the offerings of such services. Depending on the purpose for the development, NSD can be further divided into two categories (Johne, 1996). The first category focuses on reducing cost and is referred to as "new process development." The second category involves repositioning and is defined as "product diversification development." The task goals for both categories include the innovation of major service operations, the launch of new services, the offering of new services to existing markets, the extension of service lines, and the improvement and transformation of existing services (Lovelock, 1984). NSD implements structured phases such as the introduction and analysis of new concepts, the development and testing of the prototype service, and the launch of the new service (Voss, 1992). NSD defines the innovative activities that can be used by service providers in order to meet customers' demand.

Front/back Service Office: the R&D Perspective

Front/back office is a term used to describe the business structure of a service operation. The front office provides services to clients and involves direct customer contact and services based on experience and knowledge, while the back office provides remote, behind-the-scene support and services (Johnston & Clark, 2001). …

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