The SAGE Encyclopedia of Quality and the Service Economy

The birth of modern quality control is recognized to have its origin in the time of mass production and, specifically during the 1930s, with the industrial application of statistical control charts suggested by Walter A. Shewhart (1891–1967), who worked at Bell Laboratories in the United States. Shewhart identified two aspects of quality—objective quality and subjective quality—and to control these aspects of quality in industrial contexts, he introduced the control chart methodology in his 1931 book Economic Control of Manufactured Product. Since then, his work has been recognized as marking the birth of modern quality control.

The Second World War (1939–1945) provided rich opportunities for the application of control charts in various military industries. By application of the control charts, the United States was able to produce large quantities of military supplies at a [Page xxvi]relatively low cost. During the war, thousands of quality specialists were trained in modern quality control, and in 1946, these specialists established the American Society for Quality Control.

Although quality control methods were intensively applied in the U.S. military industries during wartime, and quality control was established as a recognized discipline by the late 1940s, there were only a few efforts to apply those methods outside military industries. The U.S. managers generally ignored quality control methods for several decades until Japanese products gained a reputation for high quality in the world market and gradually became dominant also in the U.S. market.

The circumstances in Japan, however, were quite different, because its industries had been destroyed during the Second World War and its people lacked almost everything. The most important and urgent task for Japan was to determine “how to survive.” In this critical situation, Japanese leaders understood that the best way to survive was to produce superior industrial products that could be accepted by and exported to foreign countries. For this purpose, the Japanese Standard Association (JSA) was founded in 1945, and the Union of Japanese Scientists and Engineers (JUSE) was founded in the following year (1946). Since then, these two organizations—JSA and JUSE—have played central roles in the training and promotion of modern quality control.

The Japanese people confronted quality issues as a national challenge, and in the two to three decades following the Second World War, they revolutionized the quality of their products and services and thereby became recognized as the world leader in quality. Some major contributors in this revolutionizing process were U.S. quality experts William Edwards Deming (1900–1993) and Joseph M. Juran (1904–2008).

In 1950, at JUSE’s invitation, Deming addressed the subject of modern quality control methods to Japanese scientists, engineers, and corporate executives. In addition to lecturing on statistical quality control (SQC) methods, Deming encouraged the Japanese leaders by saying that SQC methods were necessary resources for a poor nation without natural resources, and quality was the road that postwar Japan should take.

Compared with Shewhart, Deming did not come up with a clear definition of quality; instead, he focused on the dynamic and changing nature of quality, meaning that what is good quality today will, in many cases, not be good quality tomorrow. This view is in line with his understanding of quality, which is related to customers’ and consumers’ needs and experiences. Deming said that quality can only be defined in terms of the agent, and based on this view, he noted that the consumer is the most important part of the production line. In other words, without understanding customers’ and consumers’ needs, expectations, requirements, and experiences, it is impossible to design, produce, and deliver quality products and services. Deming emphasized that continuous product and service improvements to ensure high quality is the most critical success factor for gaining and maintaining customer satisfaction and increased competitiveness.

Deming’s courses provided the Japanese leaders with a sense of direction and purpose. By following his approach, they understood for the first time the essence of modern quality control.

In 1951, in recognition of Deming’s contribution to and encouragement of quality development in Japanese industries, JUSE established the Deming Prize, which became not only the first quality prize in Japan but also a role model for numerous other quality awards and prizes in the world several decades later. Since 1951, the Deming Prize has been the most prestigious quality award in Japan, and the prize itself has provided a strong motivation to promote quality control activities in Japanese companies.

Juran was another important person from the United States who made a great impact in Japan during the early period of the quality movement. Juran, who was invited by JUSE to give lectures in 1954, influenced Japanese companies to change the quality direction from an emphasis on mainly technique-oriented SQC to an emphasis on more general managerial aspects and a broader approach to quality control. As a result of this new trend, internal quality control audits by top management were introduced, and internal quality control audits became one of the major driving forces in promoting and improving company wide quality control (CWQC) in Japan.

Juran is also well-known for his short definition of quality—fitness for use—which has been broadly accepted as a comprehensive definition [Page xxvii]of quality. The definition includes two important aspects of quality: (1) the product features that meet customer needs and (2) freedom from deficiencies. An essential implication of this quality definition is that higher quality includes less defective elements or attributes while having more elements or attributes that satisfy customer needs.

The Japanese model of involving everybody in quality control activities—the so-called quality control circle (QCC)—was born in 1962 on the initiative of Professor Kaoru Ishikawa (1915–1989). QCCs are small groups or teams established in companies to take over the responsibility for quality control activities. Based on voluntarism, the purpose of self-development, mutual development, and total participation, these teams study, discuss, and identify quality problems during and after work hours with the aim to solve such problems.

Through the birth of QCC and its widespread activities, the foundation for CWQC was established along with the culture of continuous absorbing and practicing new theories and ideas developed by scholars and other specialists in the quality field. During the 1960s, the CWQC approach spread to all major Japanese companies, and in 1969, it was decided officially to use the term company wide quality control.

The spirit of CWQC is also well reflected in the definition of quality presented by Ishikawa, who was the leading quality expert and pioneer in Japan. According to Ishikawa, an interpretation of the term quality is important, because when defining quality narrowly, quality means quality of products. However, when defining quality broadly, quality means quality of work; quality of services; quality of information; quality of processes; quality of divisions; quality of people, including workers, engineers, managers, and executives; quality of a company; quality of objectives; and so on. Ishikawa’s broad definition of quality corresponds well with the idea and philosophy of CWQC.

As a consequence of Japan’s committed implementation of CWQC, the market share of Japanese products increased rapidly in many industrial sectors during the 1960s and 1970s. The United States and other relatively rich European countries did not pay serious attention to the gradual dominance of Japanese products despite the many “warning signals.”

While the quality movement was rooted and originated from a manufacturing and, thereby, production perspective, awareness of service was initiated from a marketing perspective. The article “Marketing Myopia: What Business Are You In?”—authored by Theodore Levitt and published in the Harvard Business Review in 1960—is considered to be the classic within the service area. In the article, Levitt provides examples of companies that became “obsolete” because they were lacking knowledge and insights on their business as well as understanding of their customers’ needs. His focus was how business leaders can shift their attention to customer needs to become successful.

During the following years, several literatures on services attempted to differentiate between goods and services mostly from a marketing perspective. Conceptually, differentiating and separating services from goods were important for marketing researchers for positioning the services field as a distinctive and independent research area. One of the early attempts on quality control in services was presented by G. M. Hostage in 1975 in a Harvard Business Review article “Quality Control in a Service Business.”

During the 1980s, many U.S. companies experienced loss of jobs and loss of market share to Japanese competitors, even in the important home market of automobiles. In winning through quality, the Japanese had become able to achieve massive market shares, which gradually became a serious threat to many Western countries, including the United States.

A remarkable turning point was provided in the United States in June 1980 when Deming, three decades after his invitation to Japan, was “rediscovered” through the NBC television documentary If Japan Can . . . Why Can’t We? This documentary has since been widely cited as a wake-up call to U.S. managers for first focusing on quality and customer needs.

As a result of this wake-up call, the 1980s became a revolutionary era for both quality and service management in the United States as well as in other Western countries. An increasing number of companies adopted quality management principles, tools, and methods, and parallel with that, numerous publications concerning quality management were published. Many theoreticians attempted to develop a holistic or synthetic theory of quality management inspired by the theories and practical experiences from the Japanese case. The term total quality control, and later total quality management (TQM), was often applied to these synthesizing theoretical attempts.

[Page xxviii]In line with the TQM movement, in 1983, Richard Normann published his remarkable book Service Management: Strategy and Leadership in Service Businesses, which is considered to be the first book on service management. In the book, Normann introduced the concept of a service management system and the value creation process of customers. It was also Normann who, in 1987, introduced the concept of moment of truth, referring to the interaction point between the service provider and the customer, where quality of service is defined in the mind of the customer. During the 1980s, quality issues were fully integrated with services, and several now well-known service quality models such as SERVQUAL (by A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry) and the Service Quality Model (by Christian Grönroos) were introduced.

Another accelerating push toward the quality movement during this period was the establishment of the Malcolm Baldrige National Quality Award in 1987 in the United States, the Australian Quality Award in 1988, the birth of EFQM in 1988, and the establishment of the European Quality Award in 1991. In the following years, most European countries, as well as countries outside Europe such as Korea and China, established similar national quality awards.

During the period 1980–1995, Western interests in general Japanese managerial approaches shifted to the core areas of quality management, and practitioners as well as theoreticians focused their energy on building new knowledge in the quality management area. The concept of TQM, a holistic quality management concept to integrate various quality subareas, emerged as a consequence of these intensified efforts and searching activities within the area of quality.

The period from the mid-1990s to the present can be characterized as a time when widespread interest in quality management has been shown by researchers, business educators, and practitioners—in teaching, practicing, and implementing quality management principles and methods. Parallel with that, an increasing number of companies have implemented TQM; hence, the general understanding and knowledge of TQM has accumulated. Several articles discuss about the advantages of TQM, but gradually, criticism and limitations of this new management philosophy have been published.

A consequence of the criticism of TQM may be seen in the change of the wording related to some of the leading national quality awards. This change in wording can, for example, be seen when comparing the following names of the European Quality Award Model:

• 1992–1997: The model was called “the European Model for TQM” or just “the European Quality Award Model”
• 1997–1999: The wording changed significantly to “the European Model for Business Excellence”

The change was a systematic one that comprised not only the name of the model but also the text describing how to use the model for assessing a company’s level of excellence or for award application purposes. The change of wording to the European Excellence Award followed a similar change in the U.S. quality award model (the Malcolm Baldrige Quality Award) a year before.

This change of wording in the leading quality award models is evidence that people’s understanding or paradigms in relation to the theoretical scope and application of TQM changed significantly during the 1990s. The historical evolution of quality control to TQM and business excellence combined with the changes in the names and wording of the leading quality award models shows that quality management has moved from being regarded as a relatively narrow engineering discipline, which top management often did not bother much about, to a holistic management philosophy that has to be integrated in the daily management of all areas of any business—manufacturing as well as service businesses, private as well as public organizations, and nongovernmental organizations.

Today, there is no comprehensive encyclopedia on the subjects of quality management and services in the existing service/experience economy. The aim [Page xxix]of this encyclopedia is to close this gap by presenting contributions from more than 200 of the world’s leading experts within the research areas of quality and service sciences.

The need for this encyclopedia is very high not only from the education and research point of view but also from the millions of private and public organizations all over the world that are challenged every day with new problems and lack of up-to-date knowledge about how to improve products, services, and experiences in the service economy, which many countries in the world are dependent on and are trying to understand.

The world has experienced a number of so-called industrial revolutions, and many developing countries are now experiencing the first service revolution, where the focus is on understanding and satisfying people’s latent needs in relation to both existing and newly developed products and services. The challenge now is to understand that to attain and sustain excellence in the new service economy, a paradigm shift is needed for many companies and organizations to practice the concepts of new experience development in parallel or integrated with new product and service development.

This comprehensive encyclopedia on quality and the service economy has been designed and developed with the aim to help researchers, educators, companies, and organizations all over the world to attain the knowledge and competencies needed for being successful in the new service economy.

As stated previously, the global society of today can be called a service economy because services permeate all aspects of peoples’ lives inseparable from most aspects of economic activity. In this service economy, quality management has become more important than ever because people’s experiences of services can be directly related to the concept of quality. If people are not satisfied with the products and services they consume or experience, it is simply because the quality does not satisfy their needs and expectations. To assure high quality of products and services, private as well as public companies and their employees must have a profound understanding of the basic principles, tools, and methods of quality management.

As quality of services also depends on consumers’ and citizens’ understanding and involvement in designing and delivering various products and services, these stakeholders also need to have at least a basic knowledge of why quality can be satisfactory on one day and unsatisfactory on another day or satisfactory for some consumers and unsatisfactory for others.

It is the aim, scope, and focus of this encyclopedia to cover major questions within the area of quality and service sciences under the following overall themes comprising the Reader’s Guide:

• Award Models for Quality and Service Excellence
• Branding
• Characteristics, Definitions, and the Nature of Quality and Services
• Communication and Social Media
• Consumption
• Culture
• Customer Management for Quality and Services
• Design for Quality and Services
• Operating and Managing Quality and Services
• Organization and Leadership for Quality and Services
• People Management (Human Resource Management) for Quality and Services
• Performance Assessments and Measurements
• Quality and Service Management Framework and Techniques
• Quality and Service Society
• Relationship Management and Marketing
• Research Methodologies
• Strategic Quality and Service Management
• Technology, E-Services and Quality
• Tools and Methods for Improvement of Quality and Services
• Tourism

Under these themes, some of the following subjects and issues are explained in the various entries throughout the encyclopedia:

• How to understand consumers’ or citizens’ needs and expectations
• How to understand, measure, and improve quality and services, including waste and the costs of poor quality
• [Page xxx]How to understand, develop, measure, and improve experiences
• How to understand, develop, measure, and improve e-services
• How to understand, measure, and balance the satisfaction of customers, employees, and other stakeholders
• How to control, assure, and improve the quality of products, services, and experiences
• How to understand and create attractive products and services
• How to understand and balance quality and productivity
• How to understand and practice leadership for quality and service improvements
• How to understand and practice personal leadership
• How to understand and practice transformational leadership
• How to understand and practice strategic quality management (policy deployment)
• How to understand and practice educational leadership
• How to understand and implement TQM
• How to understand and adapt to the principles and methods of the Toyota Production System
• How to understand and implement Zero Defect programs
• How to understand and attain excellence
• How to understand and improve business ethics and corporate social responsibility
• How to create customer focus
• How to build a quality culture
• How to build an innovative culture
• How to involve and motivate employees to release their knowledge and competencies for quality and service improvements
• How to understand and practice “mindfulness”
• How to establish and involve external partnerships in the continuous improvement processes
• How to map product and service processes and how to identify critical areas for improvement
• How to understand and improve quality of work life
• How to understand and improve quality of life
• How to understand and improve relations through relationship management
• How to use quality management within the food industry
• How to use quality management within health care services
• How to use quality management within education
• How to understand and practice green growth
• How to understand and practice the job design and job characteristics theory
• How to understand the trends in the new economy, which have been given various names such as the information society, the knowledge society, the service and experience economy, or shortly, the experience economy

More than 230 entries have been included in this encyclopedia to help readers understand the aforementioned subjects. For the first time, a comprehensive encyclopedia, covering many of the central concerns within the area of quality and service sciences related to the service economy, has been published.

The time period for creating this encyclopedia has been more than 5 years. After ideation, a draft project proposal was written together with a comprehensive list of suggested subject entries to be included in the encyclopedia. This list of entries was based on a comprehensive literature research and communication feedback from several world-known experts within quality and service sciences.

After the acceptance from Sage to run this project, we started our search for potential authors from all over the world who were able and willing to contribute by writing one or more entries to be included in the encyclopedia. During this process, many suggestions for new subject entries to be included were received and several of those suggestions were reviewed and accepted.

The writing and review process took, for many reasons, more time than we had expected, but gradually, we could see the finalization of the project coming closer and closer and the final publication date for the encyclopedia could be determined. The whole process has been inspiring for me, and through this learning process, several ideas for new entries came up. However, those ideas have to wait until the second edition of the encyclopedia, which may be published some years later.

This encyclopedia, and its high level of quality, is a testament to the efforts of many excellent people. First of all, I would like to acknowledge and thank all the members of the advisory board, with a special recognition to my husband, Professor Jens J. Dahlgaard, who gave me invaluable advice and support during the process of finalizing the encyclopedia. I would also like to acknowledge and thank all the members of the Sage publishing team, especially Carole Maurer, senior developmental editor; Kate Peterson, freelance developmental editor; Anna Villasenor, reference systems coordinator; and Leticia Gutierrez, reference systems supervisor, who supported me continuously during the whole process. This team was really professional. I am grateful to Dr. Loukas N. Anninos for his assistance with the project.

I also thank my many colleagues at the Department of Service Studies and Management at Lund University who participated and contributed in this project. Special thanks to the vice chancellor of Lund University’s Campus Helsingborg, Professor Jesper Falkheimer; dean of the faculty of social science, Professor Ann-Katrin Bäcklund; and head of the department, Assistant Professor Christer Eldh, who recognized and supported my involvement with this project during the past 5 years and also contributed entries on their specific fields of knowledge.

Last but not the least, I acknowledge and thank the many authors from all over the world who accepted to contribute the 232 entries to this encyclopedia. Without their positive will to participate, this encyclopedia could not have been finalized.