Value creation in outsourced service provision in public transportation

Journal article, 2009

Purpose – The purpose of this paper is to identify and describe the perceived value drivers (benefits and sacrifices) in outsourced service provision in public transportation. The authors focus on the suppliers’ perception of value creation for customers and value creation in a business-to-business relationship. Design/methodology/approach – In-depth interviews are conducted with 26 managers and employees participating in a business-to-business relationship concerning what create value following the critical incident technique. Findings – The results show that perceived benefits and sacrifices are related to the product, the service and the relationship. In addition, there are certain prerequisites in the public transportation system that inhibit value creation, and much value is destroyed in the business relationships before it reaches the passengers. Research limitations/implications – This paper reveals a need to find new quality strategies for the improvement and assurance of value creation in outsourced service provision. The value drivers identified originate from the suppliers’ view. Practical implications – Managers should acquire knowledge regarding the value they create or destroy, both within their organisation and in their business network, and thus ultimately for their customers. Moreover, drivers that destroy value should be identified, measured, analysed, and managed. Originality/value – The paper contributes to a better understanding of the difficulties in creating value when service provision has been outsourced. Keywords Value analysis, Outsourcing, Transportation, Quality management Paper type Research paper