Can Service Coproduction Factors Enhance Learning-by-Doing Simultaneously? Evidence from the U.S. Hotel Industry

We explore the role of service coproduction factors, including service level, service variety, and operations-centered and customer-centered cost, in fostering innovation through the effective use of learning-by-doing (LBD) in a customer-facing service context. We hypothesize that service organizations can simultaneously improve along these factors through learning-by-doing. We develop a unique panel data set in the U.S. hotel industry from 2001 to 2011 to test our hypothesis. We find strong direct effects on performance from these coproduction factors. Namely, profitability is negatively associated with operations-centered cost but positively associated with increases in service level, variety, and customer-centered cost. Furthermore, gains from learning-by-doing are higher when operations-centered cost is high or when service level, service variety, and customer-centered cost are low. These findings suggest that service coproduction factors can enhance learning-by-doing simultaneously but their economic impact is subject to certain profitability trade-offs. We close the article by offering theory and managerial implications of the simultaneous learning possibilities and allied profitability trade-offs.