2. Service Research and Service Theory

Reading, establishing and managing service businesses is informed by understanding service theory. This chapter explores and reviews the emergence and evolution of service theory. Service theory emerged in the discipline of macro-economics in the eighteenth century. In the 1980s, new insights began to emerge in response to the realization that service sub-sectors were amongst the largest and fastest growing economic sectors in developed market economies. The focus of this theory was on trying to explain the growth in service firms and in service work. Later, the focus shifted to the micro level—firms and management. The emphasis here was on the realization that a service must be consumed at the moment of production and the customer encounter played a decisive role in service transactions. Initially, the focus was on frontline personnel and their management. Later, the focus shifted towards marketing, with emphasis placed on understanding value-in-use and service-dominant logic. This has remained the dominant focus of academic debate.