Motivations on the chosen case
Numerous research studies on international services marketing have been conducted from 1980 to 1998. However, only 3 of the 124 articles selected the health care sector as the research domain (Hyder and Fregidou-Malama, 2009:273). Therefore, more research of within the health care sector should be investigated, in order to build a complete and solid picture of this less-developed research domain.
Elekta is a world-famous company in clinical solution because of its leading technological tool and treatment planning system. (Elekta, 2010: para 3) Today the Leksell Gamma Knife has been employed within more than 5,000 hospitals in 26 countries across five continents. Thus the Leksell Gamma Knife is viewed as a typical case of delivering health care services across geographical and cultural boundaries. Faced with huge cultural differences, how does Elekta manage their services in different markets? This becomes a vital question in our mind.
Purpose & Research questions
In order to explore the circumstances of how the Leksell Gamma Knife survives in a cross-cultural environment, this study is aimed at investigating how adaptation/standardization, trust, and network development overcome the problems created by intangibility and heterogeneity of service in the case of Elekta China. Three research questions have been formulated, with the aim of providing an insight into a Gamma Knife service center in the Chinese market as follows:
RQ1. How does Leksell Gamma Knife implement adaptation/standardisation in Elekta China?
RQ2. How is trust developed in the local environment, and how does it help to overcome the intangible and heterogeneous nature of service offerings?
RQ3. How are Elekta China‟s networks established, and how does it help to overcome the intangible and heterogeneous nature of service offerings?
Even the role of competitors in international service marketing is fully recognised in the literature, we hardly certify its importance based on the reality since the insufficient network to connect the Chinese Gamma Knife providers. This study investigates the development of Elekta in the Chinese market. The perspective of patients should be included, in order to maintain a balanced discussion about service marketing in the health care sector. This study was conducted from the perspective of Elekta China.
Outline of the study
As Figure 1 shows, this study is composed of six chapters. Chapter 1 describes the background to the study, motivation, purpose and research questions. After that, a theoretical framework based on the relevant literature is presented in Chapter 2. Chapter 3 illustrates the methodology employed in this study. In Chapter 4, the empirical findings are presented. The comparison between theories and empirical findings are critically discussed in Chapter 5. Chapter 6 summarises this research and further recommendations are given.
This chapter reviews the literature about service marketing and culture. Service characteristics and quality are discussed. Then, the cultural issues are explicated based on Hofstede’s five dimensions of national cultures. Subsequently, adaptation/standardization, as one of the critical issues of international services marketing, is discussed with the two other major variables, network and trust.
Conceptualisation of service
Service concept and characteristic
The definition of service by Zeithaml et al. (2006:4) is deeds, processes and performance. This definition bonds tightly with four key characteristics of service. Compared to goods, services possess four distinguishing characteristics namely, intangibility, heterogeneity, simultaneous production and consumption, and perishability (Zeithaml et al., 2008:15).
1. Intangibility –Services are predominantly much more difficult to be seen, felt, tasted or touched than goods, since services are usually delivered in the form of performance or action. Even the surgical operation and medical facilities are visible in the case of health care service sector, but quality of service is still difficult for consumers to evaluate (Zeithaml et al., 2008:16).
2. Heterogeneity – Human interaction is the essential part of producing certain services. It results in the heterogeneity of service since no two customers, nor their demands can be exactly the same. Thus, no two services would be alike even if they are delivered by the same employee. As an example, no doctor dares to employ the same treatment for different patient because the patients‟ condition varies from one to another (Zeithaml et al., 2006:16).
3. Simultaneous Production and Consumption – Services are mostly sold first and then produced and consumed simultaneously. Furthermore, customers can interact with each other during the service production process, for instance, when having class students as the consumers are a vital part of the lecture. Also, the initiative among students will affect the quality of lecture (Zeithaml et al., 2008:16).
4. Perishability – Services cannot be saved, stored, resold or returned. However, a strong recovery strategy is advised and required for when things go wrong. In the case of health care services, a recovery strategy may seem to be ridiculous since patients with serious illness cannot afford any mistakes during treatment (Zeithaml et al., 2008:17).
Hyder and Fregidou-Malama (2009:264) argue that not all of these four characteristics are equally essential in the process of international service marketing. Hyder and Fregidou-Malama (2009:264) advocate that international marketers should emphasise more on the first two characteristics, heterogeneity and intangibility.
Consumers in different regions have distinguishing behaviours and needs, which exacerbates the difficulties in delivering a satisfactory service, especially in the case of health care.
Lewis and Booms (1983) state, that service quality is a measure of the extent to which the delivered service meets consumer expectations. Service quality is crucial in the case of health care since it will become the dominant factor to affect customer satisfaction (Zeithaml et al., 2008:83).
According to the findings from previous research studies, the customers employ a multi-dimensional perspective to measure service quality. The concept of dimensions of service quality is proposed by Parasuraman, Zeithaml and Berry. The original framework consists of 10 dimensions of service quality. In the early 1990s, Parasuraman, Zeithaml and Berry narrowed down them into five dimensions, namely, Reliability, Assurance, Tangibles, Empathy, and Responsiveness (RATER).
Rust and Oliver (1994) claimed that the perception of the service quality is derived from the customer‟s evaluation of three dimensions of service encounters the customer-employee interaction, the service environment, and the service outcome.
Finsterwalder and Tuzovic (2010) suggested a variety of roles that the customer plays in service marketing, of which two are considered to affect service quality. The first role is the customer as contributor to quality. That is to say, consumers can improve the service quality when they get involved in the feedback system. Another role is that the customer can assist other customers in co-creating the service. In the case of health care, sincere communication between patients will indirectly enhance the service quality.
Price as an indicator of service quality
Tronstad (1995) claims that pricing appears to be the main reason why consumers sometimes do not buy their first choice. Generally, while the service product represents the benefit part of service value perceived by the customer, the price paid for usage is not only a part of the cost, but also a component of a service provider‟s revenues and value chain of service (Bruhn et al. 2006). However, according to Zeithaml et al. (2008: 433), one of the intriguing aspects of pricing of services is that customers are likely to use price as an indicator of both service cost and service quality, because price is at once an attraction variable and a repellent (Monroe, cited in Zeithaml et al., 2008). When quality is difficult to detect, or when price varies with different kinds of services, consumers believe that the price of the service is the best indicator of quality. Nevertheless, depending on the price as a quality indicator, there is a risk associated with the service purchase (Zeithaml et al., 2008).
Therefore, Zeithaml et al., (2008) imply that if a service provider wants to establish a market-oriented pricing policy, prices should be based on the three Cs of the pricing triangle.
According to the figure, the perceived value placed on the service by the customers will determine how much they are willing to pay for a service. Competitor offerings and their price, including the cost of customers undertaking the service themselves, will impact on how the service can be positioned and priced. A service provider also needs to take account of the costs involved in creating and delivering a service (Zeithaml et al., 2008).
Six dimensions of national cultures
Hofstede, a notable Dutch anthropologist, came up with the famous five dimensions of national culture by conducting an extraordinary scale of cultural studies. He did research on the employees working in a multicultural company called International Business Machine (IBM), with subsidiaries in 72 countries. Subsequently, Hofstede established a cultural frame work which comprised five dimensions of culture. These are the Power Distance Index (PDI), Individualism/Collectivism (IDV), Masculinity/Femininity (MAS), Uncertainty Avoidance Index (UAI), and Long-term Orientation versus Short-term Orientation (LTO). The latest sixth dimension of IVR was added by Hofstede in his revised and expanded third edition book.
Power distance (PDI): this test determines that all people are not equal, and allows them to assess their status. Less powerful employees in an organisation expect and accept that power is being distributed unequally within a country. However, results show that people in high power distance cultures, have positive emotions towards superiors, and negative emotions towards those less powerful people (Hofstede et al., 2010:55). ????
Individualism & collectivism: individualism (IDV) is generally regarded as a value independence, which believes that personal goals and interests are more essential than group interests. On the contrary, collectivism refers to a society in which from birth, people are integrated into a strong and collective group (Hofstede et al., 2010:90). Therefore, the individual or collective dimension is an important way of differentiating among national cultures (Kluckholn and Strodtbeck 1962; Triandis 1989, cited in Guo & Li, 2009, p8).
Masculinity & Femininity (MAS): This dimension reflects the gender role of females and males in the society. Masculinity stresses that men are more aggressive, ambitious, and competitive than women, whereas females are considered more humble and modest (Blodgett, 2001, cited in Guo & Li, 2009, p8).Hofstede however, advocates that both men and women are concerned with quality of life and share the same responsibility (Hofstede et al., 2010:138).
Uncertainty avoidance (UAI): it is defined as the extent to which people experience a threat in an ambiguous or unknown situation (Hofstede et al., 2010:190). In the GLOBE study, high uncertainty avoidance is measured as it is which is validated against society stress, and the need for rules. However, people in low uncertainty avoidance situations rely less on the rules and are more risk tolerant (Hofstede et al., 2010:198).
Long-term versus Short-term Orientation：The fifth dimension demonstrates that long-term orientation fosters virtues oriented toward future rewards such as perseverance and thrift. The short-term orientation stands for the fostering of virtues related to the past and present such as respect for tradition, preservation of face, and fulfilling social obligations (Hofstede et al., 2010:239).
Indulgence versus Restraint: this is a truly new dimension revised and expanded by Hofstede et al. in 2010, which has not yet been reported on in academic literature. Indulgence stands for a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun. Whereas restraint reflects a conviction that such gratification needs to be cured and regulated by strict social norms.
The limitations of Hofstede’s five dimensions of national cultures
Even if Hofstede‟s cultural dimensions have been widely employed in international business, the limitations of this theory still exist (Holden, 2002, Mc Sweeney, 2002, Myers and Tan, 2002, cited in Elise and Ingrid, 2010:10). The main limitation is obsolete. Culture changes with time. Furthermore, Hofstede‟s respondents worked in a single industry, the IT industry. Another weakness is that he regarded one country as one cultural group. China refutes this assumption since China is too big to generalise into one cultural group. In addition, the definition of each dimension could vary in different countries. For example, collectivism is organisation-based in Japan while it becomes family-based in China (Elise and Ingrid, 2010:10).
Respecting culture differences
In Zeithaml‟s opinion, culture represents the common values, norms and behaviours of a particular group and is often identified with nations or ethnicity. Culture is learned, shared, multidimensional and transmitted from one generation to the next. Understanding cultural differences is important in service marketing because of its effects on the ways that customers evaluate and use services. Culture also influences how companies and their service employees interact with customers (Zeithaml et al., 2008). Culture is important in international service marketing, where the company is taking services from one country and offering them to others, but it is also critical within countries. More and more, individual countries are becoming multicultural, and organisations need to understand how this factor affects evaluation, purchase and use of services even within countries.
In addition, values and attitudes differ across cultures. They determine what members of a culture think are right, important and/ or desirable. Because behaviors, including consumer behaviors, flow from values and attitudes, service marketers who want their services adopted across cultures must understand these differences. (Zeithaml et al., 2008).
The process of international service marketing
In 2009 Hyder and Fregidou-Malama proposed a model as \indicated in Figure 3 below. Three variables, namely, adaptation / standardisation, trust and networks, jointly function to deal with the two major characteristics of service, heterogeneity and intangibility, in the process of international service marketing. An adaptation/standardisation strategy plays a vital role in this theoretical framework since it will result in the level of trust and the form of networks. Furthermore, trust and networks also impact on each other.
Table of contents :
1.2 Motivations on the chosen case
1.3 Purpose & Research questions
1.5 Outline of the study
2. Theoretical framework
2.1 Conceptualization of service
2.1.1 Service concept and characteristic
2.1.2 Service quality
2.1.3 Price as an indicator of service quality
2.2 Cultural difference
2.2.1 Six dimensions of national cultures
2.2.2 The limitations of Hofstede‟s five dimensions of national cultures
2.2.3 Respecting culture differences
2.3 The process of International service marketing
2.4 Standardization vs. Adaptation
2.5.1 Network development
2.5.2 Guanxi —–Chinese view relationships
2.7 Business communication
2.7.1 Internal communication
2.7.2 External communication
3.1 Research purpose
3.2 Research approach
3.2.1 Qualitative & quantitative
3.2.2 Case study as research strategy
3.3 Applied method
3.3.1 Connecting to the respondents
3.3.2 Preparing for the semi-structured interview
3.3.3 Conducting the interview
3.4 Data collection
3.5 Data analysis
3.6 Reliability & Validity
4. Empirical Study
4.1 China and health care
4.2 Elekta in China
4.2.1 Elekta in China
4.3 Presentation of the respondents
4.6.1 Internal network
4.6.2 External network
5.1 Three Variables against Intangibility and Heterogeneity
5.1.1 Intangibility and Heterogeneity
5.1.2 Three Variables in international service marketing
5.2 Modification of theoretical framework
5.2.1 National culture integrated in international service marketing
5.2.2 Communication as the bond between trust and network
6.1 Discussions of the research questions
6.3 Suggestions for Further Studies