The Service Productivity and Quality Challenge

1. Front Matter

   Pages i-vi

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2. Introduction The Service Quality and Productivity Challenge

   • Patrick T. Harker

   Pages 1-10

3. Bureau of Labor Statistics Productivity Measures for Service Industries

   • Edwin R. Dean, Kent Kunze

   Pages 11-42

4. The Role of Services in U.S. Production and Trade: an Analysis of Social Accounting Data for the 1980s

   • Ranjit S. Dighe, Joseph F. Francois, Kenneth A. Reinert

   Pages 43-80

5. Is The Shift Toward Employment In Services Stabilizing?

   • David E. Lebow, Daniel E. Sichel

   Pages 81-112

6. Regional Liberalization of Trade in Services

   • Bernard Hoekman

   Pages 113-137

7. An Empirical Analysis of Foreign Direct Investment in Service Industries

   • Jiatao Li

   Pages 139-168

8. Global Outsourcing of Information Processing Services

   • Uday M. Apte, Richard O. Mason

   Pages 169-202

9. The Office Farther Back: Business Services, Productivity, and the Offshore Back Office

   • Mark I. Wilson

   Pages 203-224

10. The Economics of Customer Lock-In and Market Power in Services

    • Severin Borenstein, Jeffrey K. MacKie-Mason, Janet S. Netz

    Pages 225-250

11. Information Technology and Organizational Effectiveness

    • Johannes M. Pennings

    Pages 251-280

12. Improving Claims Operations: A Model-Based Approach

    • Uday M. Apte, Richard A. Cavaliere, G. G. Hegde

    Pages 281-310

13. A Model For Analyzing Quality in the Service Delivery Process

    • Pamela K. Armstrong

    Pages 311-342

14. Hotel Sales and Reservations Planning

    • Gabriel R. Bitran, Stephen M. Gilbert, Thin-Yin Leong

    Pages 343-363

15. Service Productivity in U.S. Credit Unions

    • Harold O. Fried, C. A. Knox Lovell, Philippe Vanden Eeckaut

    Pages 365-390

16. Productivity Growth in the Telephone Industry Since 1984

    • Robert W. Crandall, Jonathan Galst

    Pages 391-405

17. Improving Productivity in Intermodal Rail-Truck Transportation

    • Edward K. Morlok, John P. Sammon, Lazar N. Spasovic, Linda K. Nozick

    Pages 407-434

18. Politics, Markets, and Equality in Schools

    • John E. Chubb, Terry M. Moe

    Pages 435-469

19. Postal Service in the Nineties

    • Jess S. Boronico, Michael A. Crew, Paul R. Kleindorfer

    Pages 471-492

20. Back Matter

    Pages 493-509

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3 While all of these explanations seem to have merit, there is one dominant reason why the percentage of GDP and employment dedicated to services has continued to increase: low productivity. According to Baumol's cost disease hypothesis (Baumol, Blackman, and Wolff 1991), the growth in services is actually an illusion. The fact is that service-sector productivity is improving slower than that of manufacturing and thus, it seems as if we are consuming more services in nominal terms. However, in real terms, we are consuming slightly less services. That is, the increase in the service sector is caused by low productivity relative to manufacturing. The implication of Baumol's cost disease is the following. Assuming historical productivity increases for manufacturing, agriCUlture, education and health care, Baumol (1992) shows that the U. S. can triple its output in all sectors within 50 years. However, due to the higher productivity level for manufacturing and agriculture, it will take substantially more employment in services to achieve this increase in output. To put this argument in perspective, simply roll back the clock 100 years or so and replace the words manufacturing with agriculture, and services with manufacturing. The phenomenal growth in agricultural productivity versus manufacturing caused the employment levels in agriculture in the U. S. to decrease rapidly while producing a truly unbelievable amount of food. It is the low productivity of services that is the real culprit in its growth of GDP and employment share.

• Business
• Import
• Management
• Performance
• information technology
• production
• productivity

• Department of Systems Engineering, University of Pennsylvania, Philadelphia, USA

  Patrick T. Harker

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