PERFORMANCE EFFECTS OF 3 FOCI IN SERVICE FIRMS

Service businesses are often urged to focus because otherwise they will falter. In effect, the "focus or falter" argument suggests that focus by service firms is likely to result in superior performance. Service firms might focus on serving selected customer segments, capitalizing on distinctive internal capabilities, and serving particular geographic regions. Each focus offers certain potential benefits. This study collected data from the chief executives of 198 service firms to develop systematic evidence on the performance effects of these three foci. We found that a focus on selected customer segments was associated with higher performance, but a focus on either internal capabilities or geographic regions was associated with lower performance.