| This dissertation proposes solutions to some of the key challenges faced by multiproduct service firms. It is composed of three essays that explore how operational decisions, perceived quality levels, and cultural factors influence performance outcomes like market shares, quality rankings, and cost efficiency levels.;The first essay addresses the question of how operational decisions regarding a quality-differentiated product line determine the overall success of a multiproduct firm in the marketplace. Recently, the analytical literature has recognized the importance of the interplay among quality, resource consumption, and production volume. However, there is no empirical evidence that supports these findings. The lack of empirical testing might be due to the complicated relationships caused by multiple levels of competition, including intra-firm competition of products for demand (such as cannibalization), intra-firm competition of products for resources (when the resource consumptions of products are different), and an inevitable inter-firm competition for the market share, occurring simultaneously. This study analyzes two airline datasets; one dataset includes high-performing firms, and the other dataset includes firms that report financial losses. In the case of the high performers, the results show that the percentage of the product line that the premium product offered by the firm constitutes increases with quality differentiation but decreases when premium products consume more of the resources. Normally, an increase in premium seat size improves the quality perception of customers. However, this study suggests that constrained resources become the determining. When premium products consume more of the critical resources, successful firms reduce premium production volume.;The second essay studies the impact of national culture on service operations' quality outcomes. Cultural norms, beliefs, and values determine how people think, decide, and act not only in their personal lives but also while at work. Services are particularly affected by culture. This study investigates how power distance, individualism, masculinity, and uncertainty avoidance characteristic of different cultures influence the success of service design and delivery. The study investigates three aspects of the service system: structural quality, infrastructural quality, and service supply chains. The results indicate that individualism and uncertainty avoidance have significant impacts on service delivery quality. High individualism leads to reduced helpfulness, which results in poor service quality. In addition, high uncertainty avoidance causes stress for employees in unexpected situations, which are common in the service industry. It is also important to understand potential differences among different market segments within the same firm. The results show that the impact of culture may be different for the high-end and the low-end market segments. The results indicate that the business class service supply chain quality is significantly worse in high uncertainty avoidance cultures, whereas high uncertainty avoidance does not have a significant impact on service quality in the economy class service. Firms in high uncertainty avoidance cultures should become aware of these findings and make efforts to remedy their shortcomings.;The third essay studies how well an airline's operating costs translate into service quality. It also compares the service quality efficiency of full-service and low-cost airlines. Past literature has focused on either the load factors or the conformance quality of airlines (e.g., on-time arrivals, lost baggage) when measuring the firm's performance. This study measures how efficiently operating and salary costs are converted into physical structure (seat comfort, in-flight entertainment, meals, cabin cleanliness), employee behavior (enthusiasm, cabin presence through flight, consistency among staff, staff service efficiency, and staff language skills), and supply chain activities (check-in, arrival service, baggage delivery). Our results suggest that Continental, Frontier, JetBlue, Southwest, and Spirit Airlines represent the best practice frontier or are at least relatively efficient among the domestic airlines. Most of the low-cost airlines perform better in translating operating and staff-related costs into service quality. Others airlines (e.g., Alaska, American, Hawaiian, United, and US Airways) should concentrate more on improving infrastructural service (e.g., employee behavior) and the integration of service supply chain activities (e.g., check-in and baggage arrival). We have found that structural items, such as seat comfort, meals, and in-flight entertainment systems are utilized efficiently by the full-service airlines. The results also suggest that the three largest airlines (American, Delta, and United) need to consider lowering their per-flight operating costs, while staff-related expenditures are efficiently utilized by other airlines. As we compare the low-cost and full-service airlines, it is interesting to see that, although low-cost airlines are simplifying their business models to lower costs, they are also offering higher levels of service compared to the full-service airlines in the U.S. domestic dataset. |
