Modeling the operational capabilities for customized and commoditized services

According to the extant service operations management literature, substantial gains can be achieved for providers that are adept at aligning internal operational capabilities with customer needs. However, the most influential models in the field attempt to explain this alignment without regard to the core resource allocation choices relating operational capabilities to different service offerings. To further our understanding of service operations alignment, we apply a unique combination of experimental scenarios and discrete choice modeling to measure the role of managers in orchestrating operational capabilities. Using the third-party logistics tender review and bid preparation process as an empirical setting, we reveal the resource allocation choices that managers make between six distinctive operational capabilities (customer engagement, cross-functional coordination, creative solutions, operations improvement, IT infrastructure and professional delivery) and show the subtle ways in which these capabilities interact as the service context moves from one based on commoditization to one based on customization.