Interaction-Based Foundation of Services

Interaction-Based Foundation of Services

Peter Géczy (National Institute of Advanced Industrial Science and Technology (AIST), Japan), Noriaki Izumi (National Institute of Advanced Industrial Science and Technology (AIST), Japan), Kôiti Hasida (National Institute of Advanced Industrial Science and Technology (AIST), Japan), Koichiro Eto (National Institute of Advanced Industrial Science and Technology (AIST), Japan) and Akira Mori (National Institute of Advanced Industrial Science and Technology (AIST), Japan)
DOI: 10.4018/jssmet.2012070101
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Services are central parts of developed economies. They are growing in numbers, varieties and complexities. Continuous expansion of service economic activities and their rich diversity have been posing challenges for researchers and academics in developing comprehensive foundations and conceptual frameworks. The gap between spectrum of services and viable elucidation methods has been increasing. The authors attempt to bridge the gap by presenting a suitable foundation for studying service economic activities. The novel foundation originates from a higher-order interaction-based perspective on services. This perspective enables encompassment of a broad range of service economic activities. It also allows micro and macro observations. The introduced foundation and framework permits study of services in a formalized and rigorous manner. Formal descriptions of services are beneficial for computer-based modeling and simulations. The description and modeling framework is sufficiently flexible and expandable. Expandability of the framework allows for inclusion of novel and emerging services. Flexibility is beneficial for providing a desired examination depth. The presented foundation and framework for elucidation of service economic activities is a potent instrument for advancing service studies.
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Introductory Socio-Economic Perspective On Evolution Of Services

Service-oriented economic activities are dominant in contemporary developed economies, yet the least studied (Géczy et al., 2010). Over 70% of gross domestic product is generated from service-related economic activities. The dominance of service sector has become a signature-characteristic of developed economies. Despite the importance and scale of the service sector, the study of services has been relatively underrepresented in research and academia (IfM & IBM, 2008). In part, this is due to difficulties in characterizing services and developing an effective framework encompassing broad and diverse service-related economic activities (Chesbrough, 2005). This study attempts to fill the gap by presenting a novel approach enabling rigorous study of services.

Evolutionary perspective on transformation from agrarian throughout industrial to service economies provides useful developmental insights applicable to a suitable service study framework. Early human society had been largely oriented toward satisfying existential needs by producing food and raw materials. Only around the beginning of the nineteenth century, with the onset of the industrial revolution, the predominant activities gravitated toward the industrial production of goods. Slightly over century-and-half later, around the middle of the twentieth century, the transformation from industrial production to service activities became apparent. Service-related economic activities took a central position in the advanced economies. It took human society millennia to advance from agrarian to industrial production, and only less than two centuries to transition from industrial to service-prevalent economy. The transition from pre-industrial through industrial to post-industrial society, depicted in Figure 1, marked also significant transformation in services.

Figure 1.

Socio-economic and temporal perspective on three main evolutionary stages

Pre-Industrial: Meeting the survival needs was the primary attribute of a pre-industrial society (Watson, 1983). Main production activities were in the domains of agriculture, fisheries, and mining. Production was labor-intensive and simple tools permitted relatively low productivity. Service activities were minor. Early hospitality services emerged at the crossroads of trade routes and in populated areas. Tool repair services were offered by the original tool makers within the local communities. Social and educational services were largely connected to religion movements and mainly administered by priests or monks. Although direct exchange of goods was a common practice, early financial services emerged around valuable metals that served as intermediaries in goods exchange. Knowledge was transferred mainly from parents to children, or from masters to apprentices.

Industrial: Mechanized production of goods was the underlying characteristic of an industrial society (Hewitt et al., 1992; Kiely, 1998). Machines processed raw materials, made better tools and new machines. Various energy sources were discovered and utilized for powering machines. Processes for producing goods were divided into tasks. Task division gave rise to production lines and workers with specific skills. The skills could be learned relatively fast. Workers with equivalent skills could substitute each other on shifts. This permitted a virtually non-stop production. Produced goods surpassed local needs—because of increased production and productivity. Infrastructures for distributing goods and materials were built. Service activities expanded. Distribution and logistics services emerged along with transportation services. Mobility of workers improved. Housing services developed in cities. Money became the medium of exchange and financial institutions and services were created. Social systems were transformed and governments were instituted. This gave rise to social and government services. Health and educational services were also transformed. Novel discoveries led to development of telecommunication technologies that revolutionized information exchange. Information services emerged.

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