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This research demonstrates that operations agility-defined as the ability to excel simultaneously on operations capabilities of quality, delivery, flexibility, and cost in a coordinated fashion-is a viable option for retail banks encountering increasing environmental change. The question of whether there is empirical evidence that services, specifically retail banks, display the characteristics of agility like their manufacturing counterparts is open to debate. Conventional wisdom in operations management posits that most successful services trade off one capability for another. Drawing from the resource-based view of the firm, combinative capabilities view, and the cybernetics work of Ashby (1958), theoretical arguments suggest the contrary. The agility paradigm is viable in environments calling for a mix of strategic responses. Applying cluster analytic techniques to a sample of retail banks, using capabilities as taxons, we identify four strategic service groups: agile, traditionalists, niche, and straddlers. Our empirical results provide thematic explanations consistent with theory that account for how the agile strategic group offers a unique configuration of service concept, resource competencies, strategic choices, and business orientation. Profiles of the operations strategies of each strategic service group suggest that each group has found a fit between what certain segments of the market may want and what they have to offer. In particular, we found that the agile group exhibited greater resource competencies than its counterparts, requiring greater investments in infrastructure and technology. Consistent with theory, agile banks performed better over time on an absolute measure of return on assets.
(Agility; Retail Banking; Service Operations Strategy; Empirical Research)
1. Introduction
Service firms, especially those in information-intensive environments such as retail banks, face the inevitability of constant change (Harker and Zenios 2000, Melnick et al. 2000). The question "How to capitalize on fast change?" is at the top of banking managers' minds. One answer offered for banks is that they become increasingly agile (or nimble) (Nayyar and Bantel 1994, Zaheer and Zaheer 1997). According to the 2000 Malcolm Balridge National Quality Award Criteria for Performance Excellence (NIST 2000, p. 4), agility connotes that "all aspects of time performance are becoming increasingly important . . . time improvements often drive simultaneous improvements in organization, quality, cost and productivity." While several definitions of agility exist in the extant literature, one common theme prevails. Specifically,...