Service production in high captivity service firms

Service firms need to handle customer-induced uncertainty during service production. The literature argues for several mechanisms that organizations utilize to handle customer-induced uncertainty in service production. Specifically, the literature argues that involving customers as coproducers, or quasi-employees, in the production system could decrease such uncertainty. This reduction in turn decreases the need for a complex production system and high levels of human capital. Moreover, research suggests service production complexity and human capital to be interchangeable mechanisms in handling customer-induced uncertainty. In contrast to these past findings, we argue that such relationships might not hold in service firms exhibiting high captivity; firms where the customer has difficulty exiting the system once service delivery begins. Our empirical analysis provides support to our arguments leading us to identify an important boundary condition to existing theory regarding service production mechanisms.