FALL 2010

Editorial Note………………………….…1

Size, Experience and Innovation

Impact………………………………….……1

Publicly Funded R&D and Innova-

tion………………………………….......……3

The Role of Skills in the Develop-

ment of a Sector ……...………….……5

On Open Innovation………....………7

Measuring Service Quality:

A Challenge for Hotel Manag-ers………………………………......…………8

Authors, Issues and Contact

info…………………................…………10

The Innovation Impact Project (www.innovationimpact.org) has explored what determines the impact of publicly funded R&D

projects on innovation, along three broad dimensions, namely project-, firm- and market related factors (Doz, 1996; Hagedoorn

and Roijakkers, 2006). The observations from empirical and qualitative analyses are based on R&D projects funded by the Fifth

and Sixth Research Framework Programmes of the European Union (abbreviated FP Programmes).

Size, Experience and Innovation Impact by Nicholas S. Vonortas, Senior Research Fellow, InnKnow Unit,

MSL, AUEB. Professor, George Washington University, USA.

A swath of studies over the past couple of decades have enhanced a widely held impression that the Research Framework Programmes of the European Union have played an important role in developing the European knowledge base and have pointed at significant levels of additionality and European added value. Much lesser agreement exists on the extent and type of direct contribu-tion to the performance, especially in terms of innovation, of the organizations participating in the research projects funded by those programmes.

Even though R&D is a core activity and a starting point (albeit not the only one) for innovation, the link between the two is not straightforward. The commercial exploitation of research results stemming from an R&D project is a complex process governed by a multitude of factors, including the internal dynamics of the project itself as well as the motives and the innovation-related capabilities of the participants in the project, and the characteristics of the market environ-ment towards which the prospective innovation is directed (Sakakibara, 2002; Rothaermel and Deeds, 2004). Among the various factors influencing project success in terms of commercialization, this note focuses on firm size and on prior experience. Continued on page 2

Editorial Note What is the impact of firm size and experience on innovation and how should public policies evolve in order to support the desired outcomes of collaborative innovation projects? The lead article in this issue, authored by Nicholas S. Vonortas, analyses a number of some of the crucial questions addressed by the INNOVATION IMPACT study which was recently completed by a team of re-searchers from the Management Science Laboratory of the Athens University of Economics and Business in collaboration with an-other seven European leading universities and research institutes.

The reminder of this year‟s issue presents the InnKnow articles published on the website of MSL (www.msl.aueb.gr) as “stories of the month” during the year 2010. In an article titled “Publicly Funded R&D and Innovation” I question why companies engage in such projects, what benefits they gain from their participation and how should public policies evolve in order to support the desired outcomes of these projects. I. Katsikis, examines “The Role of Skills in the Development of a Sector” while V. Mantas writes “On Open Innovation” and K. Syrigou develops a model for “Measuring Service Quality: A Challenge for Hotel Managers”.

Klas Eric Soderquist

InnKnow F O R U M

ISSN 1790 - 515X ISSUE 13

Management Science Laboratory— Innovation and Knowledge Management Unit

Dept. of Management Science & Technology—Athens University of Economics and Business

1

2

...Size, Experience and Innovation Impact

The SMEs investigated in our study reported a generally strong strategic alignment with FP funded projects and de-clared they enter such projects with explicit goals related to innovation outputs such as developing a prototype, develop-ing a patentable technology, or developing a complementary technology that will enhance competitiveness. Medium-sized companies seemed well placed to reap the largest innovation benefits from FP project participation, as these organizations can achieve critical mass for R&D in a focused area. They are often either established players in their industry or quickly growing players that have overcome the threshold of suc-cessful commercialization of a first generation of innovation-based products or process technology. Generally speaking, these companies have explicit strategy and goals for innova-tion. They often take a leading role in projects, and are most frequently found as coordinators, in parallel with Research Organizations.

Small sized firms (<50 employees), conversely, often remain too focused on a core technology and too centered on re-search (compared to on development) in order to be able to sustain market driven development and commercialization in their own right. Sometimes they also feel victims to the bu-reaucracy surrounding the participation in the FP projects, as it takes significant resources away from the actual R&D activ-ity.

It is also noteworthy that the organizations presumably best positioned to commercialize an innovation, i.e., large firms with a full blown marketing and sales organization, were much less inclined to do so compared to a number of highly committed-to-commercialization SMEs. Because of the often

quite marginal role of FP projects, larger companies reported weaker strategic alignment and less explicit goals. If goals were clear, they would typically be very focused and limited to project dimensions such as developing new knowledge, building partnerships, or exploring a new technology area. Only exceptionally interviewees in larger companies referred to the external dimension of market-related goals.

A rather intriguing finding of the empirical analysis pertains to the positive effect of first-time participation in FP projects on both product and process innovation. One could possibly at-tribute this to greater motivation of “newcomers”, as other-wise there is no reason to believe that they are systematically more capable to drive FP projects to success than repeat par-

ticipants.

A strong empirical result is that prior experience of an organi-zation with R&D, irrespective of involvement in other FP pro-jects, positively and significantly affects the likelihood of ob-taining product innovation from FP projects. On the contrary, firms that have a history of imitative strategy (i.e., introduc-tion of new-to-the-firm products, as opposed to new-to-the-market innovations) are relatively less likely to report process innovation. Overall, the results concerning the “innovation

history” of both firms and research organizations largely con-firm the hypothesis of a positive association between prior innovation experience and project success.

Case analysis corroborated this result by showing that build-ing up a broader innovation culture was an important under-pinning factor behind product and process innovation suc-cess. Firms with an explicit R&D / innovation structure and model proved more successful in producing innovation re-sults.

The Innovation Impact project has produced many important results for policy-making. Related to the issues discussed in this note, it is obvious that the participation of SMEs must be encouraged and further facilitated.

References

Doz, Y. L. (1996) “The evolution of cooperation in strategic alliances: Initial conditions or learning processes?” Strategic Management Journal, 17: 55-83.

Hagedoorn, J. and N. Roijakkers (2006) “Inter-firm R&D part-nering in pharmaceutical biotechnology since 1975: Trends, patterns, and networks”, Research policy, 35: 431-446.

Rothaermel, F. T. and D. L. Deeds (2004) “Exploration and exploitation alliances in biotechnology: A system of new prod-uct development” Strategic Management Journal, 25: 201-221.

Sakakibara, M. (2002) “Formation of R & D consortia: Indus-

try and company effects”, Strategic Management Journal, 23: 1033-1050.

This research note is based on a forthcoming paper «Market, Firm, and Project-Level Effects on the Innovation Impact of FP RTD Projects» Science and Public Policy, 2011, by K. Kostopoulos, G. P. Prastacos, K.E. Soderquist, Y. E. Spanos & N.S. Vonortas.

Klas Eric

Soderquist soderq@aueb.gr

by

3

Funded by the European Commission, DG Enter-prise, the study has focused on the role of the col-laborative R&D projects funded by the 5th and 6th European Framework Programmes. The study ad-dressed the impact of research project manage-ment, and of firm, industry, technology and market characteristics on the effective utilization of re-search results for innovation. Building on a solid theoretical platform , the study has deployed a mix of methodologies for data collection including desk research, the Community Innovation Survey (CIS) database, an extensive primary data survey among over 8.000 FP participants, and some 75 case stud-ies of organizations participating in projects from all over Europe.

Characteristics and Objectives of participants

The Framework Programmes attracts highly inno-vative companies and research institutions in Europe, with R&D intensities that are above the average of their sector of principal activity. Further, and always compared to the average company in their sector of activity, FP participants are:

More networked with their customers and with

universities and other research organizations;

More orientated towards international markets;

and

More engaged in patenting activities.

Moreover, small and medium size companies that participated in the programmes roughly doubled their R&D intensity over a 5year period showing a significant positive effect at least at the level of their potential for innovation. The major motivators of joining the projects are technology and knowl-edge-related objectives including networking, de-velopment of market knowledge, and cost and risk sharing, see table 1.

An important finding is that only participants with explicit innovation goals at the start of the project are likely to achieve any successful commercialisa-tion of the project outcomes. Among the various kinds of organizations, SMEs reported the strongest strategic alignment between FP projects and ex-plicit goals related to innovation outputs, such as developing a prototype, developing a patentable technology, or developing a complementary tech-nology that will enhance competitiveness. More

specifically, medium-sized companies seem to have reaped the largest innovation benefits from FP pro-ject participation. This is because they can achieve critical mass for R&D in a focused area and often have explicit strategy and goals for innovation. They often take a leading role in projects, and are most frequently found as coordinators, in parallel with research organizations. A characteristic case study example is presented below.

Table 1. Major objectives for participating in FP funded projects

This seven-people company, dedicated to develop-ing advanced carbon recycling technologies, pre-sented a particularly successful process innovation example. The outcome of the project was a full-blown industrial application of the clean process technology developed, and initiation of a licensing process among the partners.

Based on its mission "Science to Achieve Results", bridging the gap between research and innovation is key priority of this company and a main explana-tory factor behind its strong innovation focus within the FP funded projects it participates in. Strategi-cally speaking, the company sets its R&D agenda and selects projects only if they fit 100% with its mission and technology development directions.

Technology / Knowledge

Accessing complementary

resources and capabilities

Developing a critical mass in

a specific technological field

Keeping up with state-of-the-

art technological develop-ments

Networking

Exploit technological compe-

tencies

Finding new partners

Joint creation and promotion

of technical standards

Sharing of Cost and Risk

R&D cost sharing

Risk sharing and reduction of

uncertainty

Access to funding

Market / Commercialization

Access commercialisation

competencies

Increase the speed to market

Access new markets

Publicly Funded R&D and Innovation

What is the impact of publicly funded Research and Development projects on innovation? Why do companies engage in such projects and what benefits do they gain from their participation? And how should public policies evolve in order to support the desired outcomes of these projects?

These are some of the crucial questions addressed by the INNOVATION IM-PACT study which was recently completed by a team of researchers from the Management Science Laboratory of the Athens University of Economics and Business in collaboration with another seven European leading universities and research institutes.

Moreover, it systematically integrates existing or potential cus-tomers in the projects, thus ensuring a potential offset market for what is being developed.

As the entrepreneurs summarized the approach: "On our nar-row road, we want to be the best, the most concentrated and focused to collect and exploit all the available knowledge in the field".

Organisation and project-level impacts on innovation

It is important to stress that FP projects should form part of a wider portfolio of R&D projects. Hence, innovation output cannot be attributed either to the individual FP project or to the in-house R&D project alone, but to a combination of both. Indeed, the results of our research confirmed a positive asso-ciation between prior innovation experience and project suc-cess in terms of innovation. Building up a broader innovation culture is an important underpinning factor behind product and process innovation success. A key success factor for achieving project goals is played by the coordinator organiza-tion. Successful projects shared a positive assessment of the capabilities of the coordinator as a leader and initiator, as an R&D performer, and as an administrator. Three characteristics of successful coordinators are discussed below.

Coordinator power represents the advantage that coordinators have in terms of shaping the research agenda, structuring projects according to their interests and needs, and aligning the partners around a core objective that is originally theirs. In many of the successful projects studied, traces of this coor-dinator power could be found. It represents the 'award' that coordinators can obtain, the other side of the picture being the administrative coordination 'burden' including reporting and the challenge of keeping all partners on track both scien-tifically and administratively.

A related concept is that of coordinator strength. It refers to the ability of the coordinator to face and overcome different crises that might occur during the unfolding of the project. Among the cases were projects where a partner suddenly fell

out, or simply failed to deliver a critical part. Coordinator strength acts in these situations at two levels. Partly, it con-cerns the ability of the coordinator to identify, convince and mobilize players outside the consortium to fill in the gap from the partner at fault, partly the ability of the coordinator to take on at least some of these obligations itself.

Another important factor behind successful project outcomes is the reputation of coordinator organizations as reliable, knowledgeable, cooperative and efficient. This goodwill, once achieved and as long as it can be sustained, provides a num-ber of advantages that also spill over to the project partners and the project as such. These advantages include high prob-ability of being granted relevant projects over time, relative easiness of attracting excellent partners to new consortiums and of making partners adhere and align to project objectives and management structures, and relatively strong dissemina-tion impact of the project results.

Recommendations for policy and programme manage-ment

Based on the various findings from the study, a number of recommendations for public innovation policy have been pro-posed. In order to maximize the impact of FP projects on in-

novation, policy should integrate and take into account the following:

1. Even though directly commercialisable output has not been a core objective of Framework Programmes, we found significant impact on innovation. Hence, rather than a fundamental change of the Programmes, they should be fine-tuned towards an even better enhance-ment of direct innovation impact. Simplifying the adminis-trative routines and maintaining instrument continuity are

two important issues here.

2. Because the significant role played by SMEs, their role in the strategic development of the Programmes should be enhanced.

3. Successful projects play a complementary role to R&D an innovation activities already deployed by participating organizations. Hence, a stronger focus on integrated pro-jects and enhanced flexibility in relating projects to al-ready existing competencies should be promoted.

4. For successful innovation, collaborative research consortia should include a relevant mix of partners: Organizations with strong research and innovation experience, organiza-tions with deep specialized technology expertise, organi-

zations highly motivated to pursue commercialisation of the R&D results, and experienced coordinators who man-age to align the diverse interests of the various partners.

5. Encourage commercialisation thinking at the proposal stage. Possibly provide the opportunity to innovators for a follow-up stage - or a follow-up project - where the com-mercialisation of the research results is the core priority.

The general conclusion of our study is that when initiated with explicit innovation goals, framed by efficient administrative rules, managed and executed by highly committed and quali-fied organizations, and integrated in the wider R&D and inno-vation activities of the participating organizations, publicly funded R&D projects can play an important role in the en-hancement of technological innovation in Europe.

References

Fisher, R., Polt, W. & Vonortas, N. (eds.) (2009), The Impact of Publicly Funded Research on Innovation. An Analysis of European Framework Programmes for Research and Develop-ment, Summery Report, PRO INNO Europe, INNO APPRAISAL, Paper 7, European Commission, Enterprise and Industry.

Prastacos, G, Spanos, Y., et al (2007), Analyzing and Evaluat-ing the Impact on Innovation of Publicly Funded Research Programmes, LOT 1 - Evaluation of the Impact of Projects of Community FP5 and FP6, Theoretical Background & Literature Review, Management Science Laboratory - MSL, Athens Uni-versity of Economics and Business, Project Deliverable.

4

...Publicly Funded R&D and Innovation

Introduction

It is widely accepted that the role of education and skills in influencing the location and the type of economic activities needs both theoretical devel-opment and empirical evidence, particularly in order to understand emerg-ing patterns of linkages among regions and sectors. Today, there are quite a number of studies examining the links between human capital, de-velopment and growth. Such studies include the work of Benhabib and Spiegel (1994), Bils and Klenow (2000), Eicher and Garcia-Penalosa (2001), Galor and Mountford (2002) and Mankiw et al. (1992). Some ar-gue that the ability - and need - to change existing, or formulate new sec-tors or industrial architectures derives from the emergence of new scien-tific and technological knowledge which affects the competitive dynamics of the entire economy and the way business is done.

Ioannis Katsikis ioannis@aueb.gr

by

5

New sectors have emerged on the basis of new disciplines as well as on the basis of the integra-tion of old ones with emerging bodies of theoreti-cal knowledge. Moreover, traditional sectors are affected by new disciplines in ways which chal-lenge incumbents' positions and favor the entry of new actors (e.g., telecommunications). Within this context, the role of education and skill becomes of utmost importance as it is one of the main drivers allowing for such changes to take place.

The target of our research is to examine the inter-relation and the co-evolution between the devel-opment of formal skills and the formation and evolution of a sector by studying the sectoral dy-namics in the formation of the computer services industry in Greece, between years 1940 and 2008. In the context of this study, computer services refer to business activities taking place in the form of IT consulting, implementation, operations man-agement and support services. Such activities are considered to be complementary industries form-ing the Computer Services Sector. Computer ser-

vices are characterized by a high knowledge crea-tion and knowledge diffusion intensity meaning that the firms exploiting such services position high on an innovation intensity scale.

According to secondary sectoral data (HellasStat and ICAP) the domestic ICT sector in Greece con-sists of approximately 1.870 companies. Almost 40% are in activities in the NACE 72 (Computer and related activities), while 36,4% engaged in the wholesale trade (NACE codes 514 & 518). The sector itself is quite new, since the 82,8% of the firms were established during the last fifteen (1990-2005), while three out of 10 IT firms were established during the period 1996-2000. In terms of size, four out of five firms employ up to 49 em-ployees. On average, every ICT firm employs 51 persons, while the 67,4% of the micro firms (<10 people) were established since 1996 employ an average of 24 people, when companies set up during the 80s' employ 77 people.

In terms of location, the majority of the firms (77,2%) are based in the region of Attica, a 10,7% in the second largest city of Greece, Thes-saloniki, and another 12,1% in the rest of the country. The average size of companies in other Regions, however, is considerably smaller, since the majority of them are very small (<10 people). Despite the geographical area over Attica, the rate of new businesses in the region is faster than in Athens, but this does not mean that it can alter the structural picture of the domestic ICT quickly and significantly.

The Evolution of Tertiary Education in Com-puter Services Skills in Greece

The planning of educational system in Greece is centralized. The state is responsible for providing tertiary education from Universities, Technical Universities and Technological Institutes. Private structures in tertiary education do exist, but the degrees they offer are not recognized by the Hel-lenic State. The decisions for the establishment of a new academic department, of a new discipline or for a new educational institution are taken by the Ministry of Education and Religious Affairs which is the supervising body responsible for the tertiary education in the county. Existing depart-ments can ask for the permission and the funds to establish new areas/departments but the permis-sion to do so remains to the hands of the ministry.

The European Commission urges the introduction of policy initiatives that centre on enhancing ICT training at all educational levels, updating ICT education to meet market needs and promoting life-long learning schemes (Commission of the European Communities, 2000).

The Role of Skills in the Develop-

ment of a Sector

While less developed countries in Europe currently suffer less from skill shortages than more developed countries, the as-sumption is that if they are to enter the information society, they will need to make a greater effort to increase the supply of an ICT skilled labour force than more advanced countries. Otherwise the gap between North and South is likely to widen further (EITO, 2001). The Greek Ministry of Education has responded to existing concerns regarding ICT skill shortages by increasing the number of courses offered in ICT-related subjects in tertiary level educational institutions. Particular emphasis has been placed on increasing the number of stu-dents who acquire technological training in ICTs.

During the past five years there has been systematic effort to increase official training provided in ICT-related subjects. Since 1998, 16 new departments have been created in Greek universities and three-year technical colleges, providing ICT-related training and bringing the total number of departments to 35. Ten of the new de-partments created were in technical colleges. More-over, the total number of students enrolled in ICT

related courses almost dou-bled during the same pe-riod (Zambarloukos & Con-stantellou, 2002).

While these measures are likely to benefit the ICT sector, this article argues that alone they are not sufficient in helping the majority of Greek firms in other sectors to utilise ex-isting human resources and ICT technologies more ef-fectively. Our research sug-

gests that reforming voca-tional training and educa-tion related to ICTs might be more urgently needed rather than a simple expansion of ICT education and training. As many firms in less advanced regions are unable to provide the kind of learning environment needed for their employees to develop their skills, the education system and training poli-cies should try to fill this gap. This could be achieved by com-bining formal education in ICTs with more hands-on experi-ence, which is currently lacking among those that are being employed for the first time.

The following figure exhibits the evolution of the establish-ment of new academic departments in the Greek tertiary edu-

cation. All the fields beside computer engineering, economics and business are quite new and all of them have met impor-tant developed during mainly the last 20 years. This growth has lead to the establishment of a total number of 91 depart-ments in all the categories examined in this article.

Today, academic departments relevant to computer services can be categorized into four main scientific fields: Information

Technology/Computer Science, Computer Engineering, Tele-communications and Information Systems. In all the above categories we can find departments belonging to Universities, Technical Universities and Technological Institutions.

Most of the departments focus their studies on one main sci-entific field but there are also departments that are focused in two, three or even four fields. Independently, of their fo-cus, most of the departments offer additional courses on a wide range of disciplines in order for the students to have a better view of their science. We have, though, to underline that the actually name of the Dept. is not always representa-tive of the studies offered, while in some cases it might be misleading. For example, studies in the Engineering Depts. of Technical Universities do not necessary mean studies on Computer Engineering.

References

Benhabib, J., Spiegel, M., (1994), The Role of Human Capital in Eco-

nomic Development: Evidence from Aggre-gate Cross-country Data. Journal of Mone-tary Economics 34, 143-173

Bils, M. & Klenow, P., (2000), Does Schooling Cause Growth? Ameri-can Economic Review 90 (5), pp.1160-1183.

Eicher, T. & Garcia-Penalosa, C., (2001), Inequality and Growth: The Dual Role of Human Capital in Development.

Journal of Development Economics 66 (1), 173-197.

EITO (2001), European Information Technology Observatory 2001 (Frankfurt: EITO).

Galor, O. & Mountford, A., (2002), Why are one Third of Peo-ple Indian and Chinese: Trade, Industrialization and Demog-raphy. Brown University Working Paper, 38-01.

Mankiw, G., Romer, D. & Weil, D., (1992), A Contribution to the Empirics of Economic Growth. Quarterly Journal of Eco-nomics 107 (2), pp.407-437.

Zambarloukos S. & Constantelou A., (2002), Learning and skills formation in the new economy: evidence from Greece, International Journal of Training and Development 6:4, pp.240-253

6

...The Role of Skills in the Development

of a Sector

Figure: The Evolution of Computer and Management Studies in Tertiary

Education

On Open Innovation

Although the samples are yet too small to gen-eralize, it seems that SMEs are motivated mostly by market considerations, i.e., to find pathways to markets for the internal knowledge base they have built. On the other hand "surfing" around the open innovation web pages of the large companies it stands out that "big players" are searching mostly for fresh new product ideas and specialized niche tech-nologies).

Drawing from a retrospective review on innova-tion models (Hobday, 2005, Rothwell, 1994) it is evident that the Open Innovation model is the current step on the historical path of the various ways firms adopt in order to innovate. This is not about a switch event. Rather, it is about a long term transition period towards more open operational models consistent with the openness observed in national economies globally. Similar to the case that it is the most competitive countries that benefit from global-ization, while the rest are striving to catch up, the role and situation of SMEs in Open Innova-tion is scattered by question marks opening up interesting avenues of research.

Innovation is not a simple stepwise process, but a complex, path-dependent and context-sensitive one. It takes more than having the right idea, or the right technology in place to finally offer a unique (or just better) product and reap the market benefits from innovation. Innovation at firm-level is a systemic process including at the core the sub-processes of new knowledge production, transformation of knowledge to artifacts and matching of these artifacts to market needs (Pavitt, 2004). Addi-tionally, firm-level innovation is determined by factors related to people, structures and work-ing methods, project leadership, top manage-ment commitment and support, organizational culture and strategic alignment.

On top of this, Open Innovation implies that even more determinants have to be taken into account such as to make use of an external knowledge base and collaborating with actors across and out of the value chain. Presumably the story will not end here, unfortunately. At the extreme all players in a business ecosystem should actively pursue Open Innovation. Com-petition for dispersed knowledge and callable

resources and capabilities will increase. Argua-bly firms will have to develop new capabilities for competing in this new era of open and con-nected business game.

Thus, to my perception, a firm has to "arrange" first its internal innovation system at its best potential and then open up to include various knowledge sources and complementary part-ners. Open Innovation can be the opportunity window to explore new territories and exploit further internal potential. Unless this is done with strategic orientation and operational readi-ness, SMEs might find themselves striving to innovate. Even worse it might be the case that big companies eventually will become even bigger by tapping on the knowledge of the small firms to feed their established innovation systems. Small companies might remain small if they adopt Open Innovation only to find a me-diated pathway to market and avoid the "trouble" to develop an integrated innovation system.

References

Chesbrough, H. and Crowther, A. (2006) "Beyond High Tech: Early Adopters of Open Innovation in Other Industries", R&D Manage-ment, Vol 3, No. 3, pp. 229-36.

Hobday, M. (2005) "Firm-Level Innovation Models: Perspectives on Research in Developed and Developing Countries", Technology Analy-sis & Strategic Management, Vol 2, No. 2, pp. 121-46.

Pavitt, K. (2004) "Innovation Processes," In The Oxford Handbook of Innovation, eds. Fagerberg, Mowery and Nelson, Oxford Univer-sity Press.

Rothwell, R. (1994) "Towards the Fifth-Generation Innovation Process", International Marketing Review, Vol 1, No. 1, pp. 7-31.

Van de Vrande, V., De Jong, J., Vanhaverbeke, W. and De Rochemont, M. (2009) "Open Inno-vation in Smes: Trends, Motives and Manage-ment Challenges", Technovation, Vol 6-7, No. 6-7, pp. 423-37.

[1] http://www.15inno.com/2010/03/02/open-innovation-examples-and-resources/ , as of July 2010.

Vassilis Mantas vmantas@aueb.gr

by

7

It seems that Open Innovation is embraced more and more by big multina-tional companies around the globe. P&G, Kraft, Unilever, Sara Lee, Philips, LG, Ericsson, Nokia, Siemens, Huawei, Xerox, Starbucks, to name a few firms, operate dedicated web places to accommodate open innovation prac-tices . Research has also identified that small and medium sized enterprises (SMEs) are getting involved in open innovation activities as well (Chesbrough and Crowther, 2006, Van de Vrande, et al., 2009).

Measuring Service Quality: A Chal-

lenge for Hotel Managers

One of the most common ways for managers to measure service quality is the guest question-naire. The guest questionnaire (which the indus-try also calls a “common card”) is a hotel tradi-tion (Barsky & Nash, 2001) often described as a guest satisfaction survey (Prasad, 2003). The most favored questionnaire variant is one that combines closed multiple choice questions with some open-ended questions, which, together with other collaterals, are placed in the guest-room (Lewis, 1983; Losekoot, Wezel, & Wood, 2001; Trice & Layman, 1984) for the guest to use on demand. This passive method of measur-ing service quality through guest feedback is the primary one that mainstream hotels use (Barsky & Huxley, 1992; Geller, 1984) and may be the only formal feedback mechanism employed.

A change and evolution for the hotel managers would be the shifting from a paper questionnaire to an electronic format (e-format) and the imple-mentation of “mystery shopping” as service quality measurement tools. Other service indus-tries such as airlines have influenced the shift to the e-format (Dandapani, 2006), and the prolif-

eration of online e-commerce card services‟ sup-pliers targeting the hotel industry is increasingly evident (Yelkur and DaCosta, 2001) with hotels commonly providing guest feedback links on their websites.

Concerning mystery shopping it uses trained researchers to act as customers or potential customers of an organization with the intention of monitoring and assessing the quality of the customer service experience, and the processes and procedures used in the delivery of the ser-vice. In research terms it is a form of participant observation, or “disguised observation” (Hair et

al., 2003).

The mystery shoppers taste the customer ex-perience first hand with the instruction to test it methodically, usually against a specific service standard (Wilson and Gutmann, 1998). They complete a report on their service experiences. It provides a “snapshot” of the service being provided at one place at one time, unaffected by

previous experiences (Guzman, 1992), thus pro-viding reinforcement of what otherwise only can be assumed to take place.

Organizations can use the feedback in a variety of ways, with typical uses being the improve-ment of service processes and staff behavior, with the primary intention to make the cus-tomer‟s next experience of the organization bet-ter than it was before.

Mystery shopping in short term tends to lead to improvements to the quality of service Wilson, A. (1998). An integration of mystery shopping results and questionnaire results of guest satis-faction, could provide hotel managers with more information regarding hotel‟s service perform-ance.

An ongoing research project within MSL aims at addressing the service quality problematic in the

Greek luxury hotel sector, by developing and testing a conceptual service quality measuring model reliant on both employees‟ and custom-ers‟ perception of service quality.

Krystallia Syrigou ksyrigou@aueb.gr

by

8

Service Quality is a central factor for the improvement of competitiveness in the tourism sector. Our research addresses this issue in the Greek luxury hotel sector. The hospitality sector is one of the fastest growing sectors worldwide. It constitutes the basic factor of Greece’ economic growth and contributes signifi-cantly to the country’s trade balance. In this context, service quality measure-ment is a great challenge for the hotel managers. Measuring customer percep-tion of service is a starting point of management assessment of what can be done to improve service quality.

Bibliography

Barsky, J., & Nash,L.(2001).One can‟t base management decisions on comment cards. Hotel and Motel Management (July 2), p.19.

Barsky, J.D., & Huxley,S.J.(1992).A customer-survey tool :Using the „„Quality Sample‟‟. Cornell Hotel and Restau-rant Association Quarterly, 33(6), 18–25.

Dandapani, V.(2006).Customer Feedback Journal. Re-trieved from: www.vijaydandapani.- com/2006/05/customer_feedba.html

Geller, A.N.(1984). Executive information needs in hotel companies. Ithaca, NY: Peat, Marwick, Mitchell & Co.

Guzman, I. (1992).Using shopper studies to evaluate ser-vice quality. Marketing News, Vol. 26 No. 19, pp. 23-4.

Hair, J.F., Bush, R.P. and Ortinau, D.J. (2003), Marketing Research: Within a Changing Information Environment, 2nd ed., McGraw-Hill Irwin, Boston, MA, p. 294.

Lewis, R.C.(1983).When guests complain. Cornell Hotel and

Restaurant Administration Quarterly, 24(2), 23–33.

Losekoot,E., Wezel,R., & Wood,R.(2001).Conceptualizing the research interface between facilities management and hospitality management. Facilities, 19(7/8), 296–303.

Prasad, K.(2003).A good system can resolve guest-comment-card confusion. Hotel and Motel Management, 218(19), 17.

Trice, A.D., & Layman, W.H.(1984).Improving guest sur-veys. The Cornell Hotel and Restaurant Administration Quarterly, 25(3), 10–13.

Wilson, A. (1998), “The role of mystery shopping in the measurement of service performance”,. Managing Service Quality, Vol. 8 No. 6, pp. 414-20.

Wilson, A. and Gutmann, J. (1998), “Public transport: the role of mystery shopping in investment decisions”. Journal of the Market Research Society, Vol. 40 No. 4, pp. 285-94.

Yelkur, R.,&DaCosta,M.(2001).An international comparison of electronic presence: The case of the hotel industry. Jour-nal of E-Business, 1(2), 1–17.

9

...Measuring Service Quality: A Challenge for

Hotel Managers

Contributing Authors

Ioannis N. Katsikis is a Doctoral Candidate at the Department of Management Science and Technology of AUEB and affiliated to the InnKnow Unit.

Vassilis Mantas is a Doctoral Candidate at the Department of Management Science and Technology of AUEB and affili-ated to the InnKnow Unit.

Klas Eric Soderquist is an Associate Professor of Innovation and Knowledge Management at the Dept. of Management

Science & Technology and Head of the InnKnow Unit at MSL.

Krystallia Syrigou is a Doctoral Candidate at the Department of Management Science and Technology of AUEB and affiliated to the InnKnow Unit.

Nicholas S. Vonortas, is a Senior Research Fellow at the InnKnow Unit of MSL and a Professor at George Washington University

Director of MSL

Professor Gregory P. Prastacos, gpp@aueb.gr

Head of InnKow and Chief Editor of InnKnow FORUM, Klas Eric Soderquist, soderq@aueb.gr

Senior Research Fellows:

George Kakouros, Yiannis Nikolaou, Yiannis Spanos, Maria Vakola.

Research Fellows:

Dimitris Brachos, Konstantinos Kostopoulos, Lida Kyrgidou, Alexandros Papalexandris, Sophia Philippi-dou.

Doctoral Candidates:

Katerina Fameli, Ioannis Katsikis, Vasilios Mantas, Krystallia Syrigou

Administrator:

Ioanna Tranou, itranou@aueb.gr

Phone: +30 2108203661, Fax:+30 2108828078

Website: www.msl.aueb.gr/innknow

Issue editors texts I. Katsikis, images M. Doukaki

InnKnow FORUM

ISSN 1790-515X

InnKnow FORUM is published bi-annually by the

Innovation and Knowledge Management Unit, Man-agement Science Laboratory (MSL), Department of Management Science and Technology, Athens Uni-versity of Economics and Business.

The focus of previous newsletters, available on our website, was:

Exploration into the Relationship between Managers' Sen-semaking and CSR Outcomes – lead article (no 12, fall 2009)

The Architecture of an Information Revolution – lead article (no 11, fall 2008)

Customer Involvement in Innovation and Marketing – lead article (no 10, spring 2007)

Strategic Entrepreneurship – lead article (no 9, spring 2006)

The Role of Gender in Family Business Succession – lead arti-cle (no 8, fall 2005)

Innovation Hot Spots – lead article (no 7, spring 2005)

New Product and Service Development (no 6, fall 2004).

Competency-Based Management (no 5, spring 2004).

Managing Knowledge (no 4, fall 2003).

Innovation and Entrepreneurship (no. 3, spring 2003).

Strategic Performance Measurement – Balanced Scorecard (no 2, fall 2002).

Change Management (no 1, spring 2002).

Previous Issues of InnKnow

FORUM

10