Service orientation in transitional markets: does it matter?

Abstract

Firms with a strong service orientation – that is, those whose organizational policies, practices, and procedures support service excellence – often have a competitive edge in mature Western markets. In transitional economies, however – such as within the newly opened markets of Central and Eastern Europe – the impact of service orientation on current and future firm performance is largely unknown. Particularly, in areas where service quality has lagged, enhancing service orientation might catapult a firm’s competitive standing ahead of the pack. On the other hand, boosting service orientation in markets where demand continues to outpace supply may add unnecessary cost, and little visible short‐term gain. In this study, the SERV*OR scale, a measure of organizational service orientation, was administered to 105 employees from two Slovenian banks – a newly established private bank and a large, older, state‐supported bank. The private bank outperformed the state bank in service orientation and in financial performance, lending support to the idea that service orientation may enhance rather than detract from firm performance in transitional markets.