Service Chains’ Operational Strategies: Standardization or Customization? Evidence from the Nursing Home Industry

Lu Kong (), Kejia Hu () and Rohit Verma ()
Additional contact information
Lu Kong: Muma College of Business, University of South Florida, Tampa, Florida 33620
Kejia Hu: Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee 37235
Rohit Verma: VinUniversity, Hanoi, Vietnam; Cornell University, Ithaca, New York 14850

Manufacturing & Service Operations Management, 2022, vol. 24, issue 6, 3099-3116

Abstract: Problem definition: We investigate how the degree of standardization (DoS) across service chain-belonging units impacts units’ performance outcomes. We study this question in the nursing home industry, focusing on the DoS in three operational dimensions—customer mix, service offering, and service delivery—and its impact on three nursing home outcomes: financial performance, clinical outcome, and resident welfare. Academic/practical relevance: All service chains must decide how unique or standardized each of their units should be, but it is unclear how this decision affects units’ performance outcomes. We assess standardization strategies in multiple operational dimensions in chain-belonging nursing homes and their impact on important operational outcomes, and generalize our findings to other service industries. Methodology: We use a panel data set covering 11 years (2005–2015) of comprehensive measurements of all nursing homes in the United States. We estimate the relationship between the DoS and important nursing home outcomes using fixed-effect models with instrumental variables and clustered standard errors. Results: We find that chain-belonging nursing homes that (1) customize service delivery and standardize customer mix relative to the chain norm tend to experience improved financial performance; (2) standardize customer mix tend to experience improved clinical outcome; and (3) customize service delivery tend to experience enhanced resident welfare. Managerial implications: To our knowledge, this study is the first systematic multidimensional assessment of multiunit service firms’ standardization strategies from a chain perspective. Our results guide nursing home chains in their (1) strategies of within-chain standardization, and (2) investment decisions in acquiring new properties. Our results also provide broader managerial insights for service chains’ standardization strategies and merging and acquisition activities.

Keywords: service strategy; standardization; customization; healthcare operations; nursing home (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/msom.2022.1111 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormsom:v:24:y:2022:i:6:p:3099-3116

Access Statistics for this article

More articles in Manufacturing & Service Operations Management from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().