Determinants and Effects of Service Design in Enterprises

The service industry has been expanding in the world and its structure is being gradually advanced today. Among developed countries, the service industry now employs more workers than the manufacturing sector and contributes more value added. In the manufacturing industry, manufacturers expand their businesses toward services rapidly, providing a variety of services related to products. Manufactured products are sold as commodities bundled with services, or related services are sold before and after sales of the products or provided free of charge. In terms of the market structure, the purchasing power of consumers has increased considerably due to the increase in real wages, and the market power has shifted from suppliers to the consumers due to excess supply. Therefore, suppliers have been able to survive by diversifying products according to consumers’ preferences, rather than employing mass production strategies as in the past. This study determines what factors prompt an enterprise to use service design and how service design affects the performance of an enterprise that invests in design. The extant literature on the effects of service design on enterprises or industries is scant, and previous studies on service design are limited to national or local public services. This study focuses instead on the effects and values of service design in corporate businesses. We first examine the concept of service design from the perspective of industry, including both the manufacturing and service sectors, and how service design applies to specific tasks within individual enterprises. Then, we analyze the factors that determine whether an enterprise applies service design, and the quantitative and qualitative outcomes derived from the service design. For the econometric analysis, we use survey data collected from 499 Korean enterprises.