Partner Selection, Interorganizational Coordination, and New Service Development Success in the Financial Service Industry

• Author: Ja‐Shen Chen,Hung‐Tai Tsou,Zhi‐Qiang Wang
• DOI: http://doi.org/10.1002/cjas.1487
• Published date: 01 June 2019
• Date: 01 June 2019

Partner Selection, Interorganizational

Coordination, and New Service Development

Success in the Financial Service Industry

Hung-Tai Tsou*

Wenzhou University

Ja-Shen Chen

Yuan Ze University

Zhi-Qiang Wang

Wenzhou University

Abstract

This study aims to investigate the relationship between part-

ner selection and new service development (NSD) success.

We identif‌ied three partner selection factors based on part-

ner selection theory: partner reliability, partner expertise,

and partner compatibility, and suggested product-market

experience and technological experience as moderators.

We developed a questionnaire and distributed it to 446

f‌inancial service companies in Taiwan. Overall, we received

122 usable pairs of responses from each f‌irm’s sales

manager and marketing manager. The results indicate that

interorganizational coordination contributes to NSD

success. Among the three partner selection factors, partner

reliability and partner compatibility were found to positively

affect interorganizational coordination. In addition,

product-market experience enhances the positive effect of in-

terorganizational coordination on NSD success. Copyright

© 2018 ASAC. Published by John Wiley & Sons, Ltd.

Keywords: partner selection, interorganizational coordina-

tion, new service development success, product-market ex-

perience, technological experience

Résumé

Cette étude porte sur la relation entre la sélection des

partenaires et le succès de la mise sur pied de nouveaux ser-

vices (NSD). À partir de la théorie de la sélection des

partenaires, trois facteurs de sélection des partenaires y sont

recensés notamment la f‌iabilité, l’expertise et la

compatibilité des partenaires. Par ailleurs, l’expérience

suggérée sur le marché des produits et l’expérience

technologique y sont examinées en tant que facteurs

modérateurs. Pour mener à bien l’étude, nous avons

distribué un questionnaire à 446 sociétés de services f‌inan-

ciers basées à Taïwan. Dans l’ensemble, nous avons reçu

122 paires de réponses utilisables envoyées par les

directeurs des ventes et les directeurs marketing des

entreprises retenues. Les résultats indiquent que la coordi-

nation interorganisationelle contribue au succès de la

NSD. Quant aux trois facteurs de sélection des partenaires,

on constate que si la f‌iabilité et la compatibilité des

partenaires ont une incidence positive sur la coordination

interorganisationnelle, en revanche, l’expérience du marché

des produits renforce l’effet positif de cette coordination sur

le succès des NSD. Copyright © 2018 ASAC. Published by

John Wiley & Sons, Ltd.

Mots-clés: sélection de partenaires, coordination

interorganisationnelle, succès de la mise sur pied de

nouveaux services, expérience du marché des produits, ex-

périence technologique

Introduction

For a long time, manufacturing has been the leading

industry in Taiwan’s economy. With the erosion of the

country’s cost advantage, however, the niche for manufactur-

ing has been disappearing. Transforming to a service

economy is a possible option. Among service economies,

the f‌inancial service industry in particular has become the

new economic engine, leading toward new economic devel-

opment. For example, numerous Taiwan banking f‌irms, such

as Cathay Financial, Fubon Financial, Chinatrust Financial,

*Please address correspondence to: Hung-Tai Tsou, School of Entrepre-

neurship, Wenzhou University, Chashan University Town, Wenzhou City,

Zhejiang, China. Email: daber520530@yahoo.com.tw

Canadian Journal of Administrative Sciences

Revue canadienne des sciences de l’administration

36: 231–247 (2019)

Published online 1 April 2018 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1487

Can J Adm Sci

36(2), 231–247 (2019)Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd. 231

Mega Financial Holding, and others, are well known world-

wide. Due to economic development and the maturity of

industrialization, the service industry’s output value in

Taiwan accounted for over sixty percent of the national

GDP (National Statistics, Taiwan, 2016). In addition, the

f‌inancial service industry had a high growth rate (that is, a

high annual rate of change by percentage) within the

Taiwan service industry, showing the importance of

Taiwan’s economy (Directorate-General of Budget Account-

ing and Statistics, Executive Yuan, Taiwan, 2016).

Financial markets in Taiwan are highly competitive and

turbulent, and f‌inancial institutions are linked to customers

and to each other in an extensive network of interrelation-

ships that is more complex and reciprocal and less linear

than traditional manufacturing and retailing industries. It is

necessary for f‌irms to provide and develop better services

to sustain their competitive advantage by collaborating with

partners. For example, most Taiwan f‌inancial institutions

have collaborated with Nippon Electric Company (NEC) to

provide new services (such as f‌inancial branch systems,

remittance concentration, seal identif‌ication, Internet bank-

ing, new-image branches, Recycle ATM, and CRM / SFA

systems), and to tailor better f‌inancial solution programs to

meet customer needs. In addition, Taiwan f‌inancial f‌irms

have collaborated with EasyCard Corporation and with tele-

communication companies to provide mobile payment

services that can reduce the number of users who need to

carry out transactions.

Because of the dramatic transformation (from Bank 2.0

to Bank 3.0) in Taiwan’sf‌inancial market, f‌inancial f‌irms are

starting to become aware of the importance of collaborative

service innovations (Chuang & Lin, 2015). For example,

Cathay United Bank and LINE co-launched the LINE Pay

stored value payment account function through which a user

can transfer money through the LINE address book and

record tracking status; the system also includes actuarial

apportionment and quick collection functions. CTBC Bank

collaborates with 7-Eleven to provide customers with the

ability to deposit, withdraw, transfer, and other f‌inancial

services anytime, anywhere. E.SUN Bank collaborates with

PayPal to provide a rapid withdrawal service for Taiwanese

and foreign currency.

The above phenomenon taking place in the Taiwan

f‌inancial service industry exemplif‌ies the new service devel-

opment (NSD) collaboration frequently characterized by the

need to share, access, and absorb complex and strategic

resources ultimately in order to improve the performance

of organizations. Increased competition is likely to raise

the success rate of collaborative NSD required to survive,

and high success rates of collaborative NSD are likely to

increase the need for f‌inancial f‌irms to integrate partners’

resources and valuable information in their new services

for sustained prof‌itability. However, although collaboration

increases the potential for developing successful new

services (Alam, 2006), projects are often implemented

ineff‌iciently, and there is ineffective communication be-

tween partners (Emden et al., 2006). Accordingly, effective

coordination requires a facilitator to handle these interdepen-

dencies during any successful collaborative NSD process.

Thus, the coordination role requires further elucidation

(Ren et al., 2008). Despite the importance of coordination

for Taiwan’sf‌inancial service f‌irms, very little research at-

tention has been paid to coordination in a NSD context.

There is little empirical evidence regarding the extent

and nature of the effect of coordination on innovation perfor-

mance (Woodside, 2005). Although past f‌indings have

highlighted the relationship between coordination and inno-

vation practices from an intraorganizational perspective

(Johne & Storey, 1998), this perspective has not been

explored in depth. Although an interorganizational view of

coordination is especially important to f‌irms, the critical

questions of whether and how interorganizational coordina-

tion between f‌irms and partners impacts NSD success have

yet to be fully addressed. The existing literature attests to

the importance of interorganizational coordination for NSD

success in the Taiwan f‌inancial service industry and high-

lights the need to focus research in this area.

To enhance the unique NSD competencies of a f‌irm, it

is necessary to access and capture the assets and capabili-

ties of the partnering f‌irm. Selecting partners is a critical

decision that can affect both competence and resources.

Based on the theory of partner selection (Emden et al.,

2006), when partners have compatible cultures that allow

them to overcome potential or foreseen industry conf‌licts,

they are likely to understand one another and are therefore

inclined to work toward common goals. Thus, partner

selection is an important factor in collaborative behaviour

(Hitt et al., 2000). Emden et al. propose three key factors

that ensure an effective collaboration process: relational

alignment, technological alignment, and strategic

alignment.

Relational alignment occurs when partners possess

compatible cultures, which allows them to more easily over-

come conf‌licts that may arise; they are more likely to under-

stand one another, and will be more inclined to work toward

common goals. Compatible cultures and a shared positive

history tend to facilitate collaboration and enhance its ef-

fects. Thus, we propose partner reliability as an antecedent

to interorganizational coordination.

Technological alignment describes a partnership in

which partners possess a unique expertise that expands the

range of competencies and can be leveraged to enhance

service production related activities. Accordingly, we

employ partner expertise to identify expert customers who

possess the knowledge and information necessary for collab-

orative practices.

Finally, strategic alignment refers to the extent to which

partners have corresponding motivations to enter into a

collaborative partnership. We propose that when a partner

is able to contribute specif‌ically to a collaboration, its

PARTNER SELECTION FOR NSD SUCCESS TSOU ET AL.

Can J Adm Sci

36(2), 231–247 (2019)Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd. 232