Topic outline

  • MODULE 1: SERVICE ECONOMY

    The first module introduces key concepts and premises for studying services and the management of service activities in business and society. The first session deals with the course practicalities and presents conceptual and theoretical perspectives on services, service systems, and service-based value creation.

    After this module you should be aware of the practices, assignments and grading principles of the course. Also, you should be equipped with the key concepts and principles of service-based value creation in business and society. Moreover, you should understand the role of services in the economy, the main characteristics of service, how services can be defined, the contextual factors of service operations, including the sources of variability and challenges of productivity in services – and how these relate to managing service operations in open production systems.

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      Wed 17.1.2024: Key concepts

      In this session, we discuss the course objectives and practicalities, and learn the key concepts relevant for understanding and analyzing services and service operations.

      The definition of services has been debated intensively. The current view is that services can be defined from three perspectives: (1) immaterial offerings (IHIP); (2) valuable state changes; and (3) producer-customer interactions involving resource integration and value co-creation. 

      Pre-reading articles:


      Lecture material:

      • TU-E2013-M1-Session1-KeyConcepts-Rajala.pdf


      After the session:
      • Take the M1 Session 1 Quiz - Key concepts (DL 19.1.2024 at 23.59) The DL was extended because this is the first session.
      • Submit your M1 Session 1 Participation Self-assessment (DL 19.1.2024 at 23.59) The DL was extended because this is the first session.
      • Answer the Participation in article review groups Questionnaire (latest by 22.1.2024 at 16.15) The DL was extended because this is the first session.

    • Not available unless: You are a(n) Student
      Questionnaire icon
      Participation in article review groups Questionnaire
    • Quiz icon
      M1 Session 1 Quiz - Key concepts
      Students must
      Receive a grade

      After participating in the day's session, please take the quiz to test your learning.

    • Not available unless: You are a(n) Student
      Quiz icon
      M1 Session 1 Participation Self-assessment Quiz
    • Not available unless: You are a(n) Student

      Wed 24.1.2024: Service economy and service production

      This session deals with the service economy and productivity in services. World economies have since the 18th century shifted in their composition from agriculture to manufacturing to services, which now account for three quarters of GNP in modern economies. This does not mean there would be less food and gadgets in the world, it is just that their production requires less labor, and that services contribute more value.

      The expansion of the service economy coincides with diminished productivity growth. This is the Baumol’s disease, which postulates that (a) productivity grows slower in services than in manufacturing, (b) in a free market wages in the service sector follow those in manufacturing, from which follows that (c) the prices of services increase relative to goods. This in turn has a profound impact on consumption, labor markets, and the global division of labor. Baumol’s disease is not destiny. The mission of Service Operations Management is to investigate the nature and dynamics of service production to create a knowledge base upon which productivity improvement becomes possible. Productivity, after all, is the relation between input and output. When productivity improves, more can be had for less. Therefore, productivity is a key element in sustainability.

      Pre-learning podcast:


      The podcast (ca. 45 min.) discusses the fundamentals of services, service economy and service productivity by Paul Lillrank & Mikko Heiskala - Intro and Outro music: clip from 15-youtube-kanalteaser-sounds by Sascha Ende (CC 4.0 license). Note: you can also download the podcast from the Learning materials folder as a mp3 file. 

      Pre-reading articles:


      Lecture material:

      • TU-E2013-M1-Session2-ServiceEconomy-Lillrank.pdf


      After the session:

      • Take the M1 Session 2 Quiz - Service Economy (DL 26.1.2024 at 16.00)
      • Submit your M1 Session 2 Participation Self-assessment (DL 26.1.2024 at 16.00)
      • Submit your M1 Learning Diary: Service Economy (DL 31.1.2024 at 9.30)

    • Quiz icon
      M1 Session 2 Quiz - Service Economy
      Students must
      Receive a grade
    • Not available unless: You are a(n) Student
      Quiz icon
      M1 Session 2 Participation Self-assessment Quiz
    • Not available unless: You are a(n) Student
      Assignment icon
      M1 Learning Diary: Service Economy Assignment
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MODULE 2: VALUE CREATION BY SERVICE