Security service adoption in B2B context: do clients and providers hold congruent views?

• Author: Westerlund, Mika
• Position: Business to business - Report

1. INTRODUCTION

   Security is no longer optional--it's a must have as security concerns have escalated in many industries and societies. The burden of increased crime and disturbance in society has overcome public authorities' potential to response to private firms' security demand. Economic development and globalization have presented companies and businesses with new security needs. As a result, e.g., Prentzler et al. (2007/2008) augment that the private security industry grows apace and illustrate that the number of private security providers in Australia rose by 41 per cent over the 10-year period from 1996 to 2006. According to Yoshida (1999), the private security industry in Japan has grown from 775 companies in 1972 to 8,669 companies in 1996. Van Steden and Sarre (2011) put forward that in 2005 the United States boasted 60,000 security companies, and private industries employed approximately 1.5 to 2 million guards. The rise of global security industry has been rapid and the number of security workers actually outnumbers the police force in many countries. For example, the number of security workers in Canada was at around 82,000 compared to just over 59,000 police in 2002; and there were 459,000 security guards as opposed to 240,000 police officers in Japan in 2003 (Van Steden and Sarre, 2011).

   Security is traditionally regarded as a recession-proof industry, and now, with the escalation of global terrorism, crimes, fraud and vandalism, and the rapid development of information technology, the demand for protection has increased. However, the bad news is that security has until now been regarded as a grudge purchase that was bought at the cheapest possible cost (Van Steden and Sarre, 2011). Diminishing profit margins, particularly due to the inexpensive new technology and the digitalization of services, have urged private security companies put more effort on developing security services that meet the embedded customer needs more intensively and provide superior value-in-use for the clients. At the same time, firms offering outsourced security services have taken over many tasks that were traditionally executed by client's own personnel, such as visitor badging and guest access services. Nevertheless, security industry is faced by the incessant challenge of understanding what drives their clients' security service adoption and what kind of value-creating services are needed in the future. The challenge is similar to that of firms in other industries focusing on the value-in-use of services and the ways to improve it through intense service provider-client collaboration (Moller et al., 2008). For example, Securitas, which is one of the largest and leading security firms in the world, currently state that they are "strongly client-focused company and their emphasis is on providing value-added services which enable them to become a long-term, strategic partner for security with their client organizations" (Securitas 2010a). The tasks of such a partner include not only taking care of client's imminent security needs, but providing services that support and foster client's business and daily operations. The value-based approach to strategy argues that a firm's ability to capture value depends on the extent of its added value (Chatain, 2010). Therefore, it is vital for security providers' strategy to understand what drives clients' security service adoption and what their expectations of the provider's value creation outcomes are.

   We propose that understanding and addressing properly the value-in-use of security services is probably the biggest challenge for security providers. In this study, we investigate the effects of provider's value creation, i.e., the benefits clients gain from using outsourced professional security services, and their relationship to clients' service adoption. We establish a research model and test it over a sample of firms that are members of a national security association. As some of these firms are security providers whilst others represent clients, we are able to compare and spot potential differences between their views. Because the national security association provides a common platform for innovation and collaboration, one would expect similar assessments of the key drivers and reasons for service use among the parties. Through this paper managers learn that, despite the existence of the platform, in the business-to-business security service context, the supply-side and the demand-side actually may hold incongruent understandings on what provides value-in-use for clients and promotes their security service adoption.

2. THEORY AND HYPOTHESES

   Value is a complex and crucial concept in business and economics (see, e.g., Sanchez-Fernandez and Iniesta-Bonillo, 2007). A very useful definition is provided by Haksever et al. (2004), who discuss the value-in-use and claim that value is 'the capacity of a good, service, or activity to satisfy a need or provide a benefit to a person or legal entity'. In addition, they (ibid.) point out that for value to exist it must be perceived as such by the recipient. Allee (2000) discusses value from the perspective of value-creating intangibles and intellectual capital, and suggests there are three types of intellectual capital that matters for firms. These types are traditionally considered as people, processes and structures, and customers. Allee (2000) expands the traditional view and puts forward a new typology. According to this view, the main aspects that support firms' operation and provide value are: a) external capital (including relationships with customers, partners and other stakeholders, as well as brand recognition, corporate image and goodwill, and social responsibility), b) human capital (internal capabilities, skills and knowledge that reside in the employees of the firm, personnel's health and safety, as well as corporate identity as opposed to corporate image), and c) structural capital (including core operational systems, processes, as well as business concepts and models that bring competitive advantage.)

   It is logical to assume, that any protective action in these aspects will promote the firm's success of operation. Customer-perceived value is often considered as a difference between the benefits and costs of obtaining a product or service (Lapierre, 2000). Following the above presented typology and assumption we suggest that the benefits of using outsourced security services are especially threefold. First, we believe that using security services will support a firm's operational effectiveness. In the value context, this refers to improved productivity and facilitating operations (Lapierre, 2000). It means that outsourced services enable the firm concentrate on its core activity and save own resources for more crucial tasks from the perspective of its business models and processes. Second, we believe that using security services will promote the firm's internal perception of security. This means that outsourced services allow employees to become more aware of safety and security regulations and requirements, gain more knowledge on the safety practices, and develop a security-oriented mindset. Third, we believe that using security services enable a firm to focus on its customer and stakeholder relationships, and improve its brand recognition and visibility. We consider this as a firm's external perception of security, as the target lies on external actors and capital.

   The most important of these benefits is probably the operational efficiency. It has become one of the key sales arguments for security firms, hoping to attract new customers and achieve their service acceptance. The underlying idea is that security providers have grown beyond dealing with mere security incidents, and professional security services may foster the client's business in general. For example, Securitas (2010a) suggests that in providing value-added services, the firm "begins by working with clients to objectively assess their existing security programs and determine if changes are necessary to better serve their security needs and business objectives." The first task is to perform an operational analysis, which will help the firm to co-create value with their clients in order to support clients' business objectives and improve their...