Tipología básica de proyectos

In the previous section, we already noted that selecting a service provider involves search costs for client companies. This is related to the fact that with services, the quality of outputs cannot

objectively be assessed in contrast to some physical goods. Standards are less prevalent in business services, as analysed in section 2.4. If a client wants to know if it will get services of good quality, it has to rely more on subjective factors, like reputation and personal experience, which contribute to higher search costs. Likewise, providers rely on co-production by their clients. This implies that clients should provide a good scoping of the service requirements and purpose beforehand and commitment and absorptive capacity during co-production to ensure effective provision and use of the service. Information on the quality of each of these participation aspects of clients is difficult to assess by the provider when considering what assignment to tender for. The market for business services is thus characterised by asymmetric information.22

In the service to consumer market there are various private business initiatives to reduce this information asymmetry, notably by increasing transparency for potential clients. Examples include websites containing customer reviews (e.g. in the tourism sector) or websites comparing different service providers in price and quality (e.g. comparing different insurance providers). We have not encountered such examples in the sector studies. This is probably due to the fact that the

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This argument would especially be valid for somewhat larger companies-or niche players- not the smaller ones providing ‘general’ services as most of them operate only locally, not even nationally.

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Although the problem of asymmetric information may be relevant from other perspectives as well (e.g. in access to finance), we focus here on information asymmetry in the interaction with the client notably the selection process.

58 Study on business-related services

consumer service market is homogenous and therefore more transparent than the business services market in the sense that it is easier to obtain information on the services provided. This in turn is partly related to the higher degree of customisation in business services. It is difficult to compare customised services. In addition, service providers are less likely to be transparent about their offers, as this will reveal confidential information on how they address a certain problem (approach) at what costs (budget), which could possibly benefit their competitors. The above is linked to the degree of standardisation of a service. The more standardised is the service, the easier it is to provide meaningful price/quality comparisons. Another explanation could be that these kinds of websites are often private initiatives from companies that see the market value of this information- they can attract a large number of visitors to their website, which generates interests from companies willing to advertise on these websites. Similar initiatives for business services are less likely to attract an equally large number of visitors and are thus commercially less attractive.

Apart from these initiatives, there are industry led initiatives that increase transparency. The latter include requirements for memberships of professional associations / certification schemes / industry codes of conduct etc. These can also be considered as initiatives to increase transparency about the quality of service provision. We have seen such initiatives in for example market research (codes of professional conduct) and marketing (recognition of professional qualification). These initiatives are closely linked to service (process) standards, and stay relatively more limited than for goods sectors. The limited use of standards in the service sector was confirmed in our sector studies. Of course, business services have to take into account the standards of their client sectors. This is notably important in engineering consulting and industrial cleaning. But we did not find extensive use of sector-specific standards.

Only market research companies increasingly seem to be making use of international industry- specific ISO standards, like 20252:2012. This is a process quality standard, which establishes terms, definitions and service requirements and deals with issues such as data collection, data management and processing, and project documentation. The standard does not address design quality as there is no consensus on what constitutes quality and because ‘good’ quality design will partly depend on the purpose of the research. Nevertheless, use of the standard allows companies to carry out cross-border, multi-country research studies as the standard helps to regulate cultural, social and behavioural differences between countries, thereby reducing the barriers between countries.23 In private security services, there is some self-regulation at national and EU level through the relevant associations. An example is the establishment of a code of conduct that addresses among others the selection, recruitment and training of workers. This is not a formal standard and thus not checked by an independent organisation as in the case of ISO standards.

The application of standards is more difficult in sectors with a high degree of customisation, and given that three out of four sector studies are KIBS with highly customised goods, the limited use of standards is not a complete surprise. It should also be noted that the initiatives identified in the sector studies confirm the findings from the literature (section 2.4) that standards in the services sectors are focused more on process than on product. This implies that even if standards are applied, they still do not give a guarantee for a certain quality and thus only partially reduce the information asymmetry problem. There may be more scope for performance standards in more standardised business services. In this study, industrial cleaning is the sector delivering most standardised services. Indeed there were some initiatives for standards in this sector, as in 2001 CEN produced a standard on cleaning services. This seems to have generated little interest for the sector, however, and the technical committee dealing with cleaning performance was declared dormant in 2008. Still there may be scope for such standards, as for example Sweden, Norway and Denmark have been able to develop a Nordic standard INSTA-800 (revised and published as

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INSTA 800 E:2007 – ‘Cleaning quality – Measuring system for assessment and rating of cleaning

quality’).24 This striking difference in experience may have to do with the fact that there are differences in opinions as to the extent to which cleaning services are standardised. Although participation by clients generally remains mostly limited to the procurement stage, this already implies that the service provided is specific to the requirement of each client. Acceptance of a Nordic standard in contrast may reflect the fact that market conditions are quite similar in these countries and leading companies are already operating at a regional level.

Concluding, market asymmetry is a market failure putting clients at a disadvantage and there are less initiatives to reduce the information asymmetry as compared to the goods sector (standards) or consumer services (transparency initiatives). This issue will therefore be further addressed in the next chapter on policy recommendations.