Measuring and Improving Productivity in Services

Measuring and Improving Productivity in Services

Issues, Strategies and Challenges

Services, Economy and Innovation series

Faridah Djellal and Faïz Gallouj

The definition and measurement of productivity in services raises important conceptual, methodological and strategic problems. This book aims to provide a critical review of the main debates on productivity in the domain of services. The first part examines the theoretical consequences of services specificities on the concept of productivity and reviews the attempts to measure it. The second part is devoted to the main determinants of productivity growth and the strategies to increase productivity in service firms and organisations.

Chapter 2: The Service Challenge

Faridah Djellal and Faïz Gallouj

Subjects: economics and finance, industrial economics, services

Extract

INTRODUCTION The concept of productivity saw the light of day in industrial and agricultural economies. It can be said to have reached the apogee of its reign in economies dominated by a Fordist growth regime, that is a regime based on productivity gains obtained through increasing mechanization, a deepening division of labour and the exploitation of economies of scale, mass consumption of standardized products and wages indexed to productivity. To a certain extent, therefore, it is the Fordist concept par excellence. As we observed in the previous chapter, the debates it sparks off in such a context are concerned with (incremental) improvements to a notion that is universally accepted (even by the social actors, although they may be at loggerheads with each other over the distribution of productivity gains). The advent of the service economy (considered from both the functional perspective, that in terms of service functions within manufacturing industry, and from the sectoral point of view) has called into question in a much more fundamental way the methods used to measure productivity, with some commentators even going so far as to question the very validity of a concept adjudged to be outdated and obsolete. We will begin this chapter by describing, from various points of view, the specificities of services in general1 and their consequences for the definitions of indicators of productivity and performance. We will then turn to the ways in which productivity is actually measured, making a distinction, once again, between index-based methods and frontier...

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