Analyzing the sustainability of a newly developed service: An activity theory perspective

Analyzing the sustainability of a newly developed service: An activitytheory perspective

Fu-Ren Lin a,n, Pei-Shan Hsieh b

a Institute of Service Science, National TsingHua University, Taiwanb Institute of Technology Management, National TsingHua University, Taiwan

a r t i c l e i n f o

Keywords:New service developmentActivity TheorySustainabilityHealthcare service

a b s t r a c t

New service development (NSD) is the process of creating new services to fulfill target customers' needs.It is essential that an NSD project team cooperate across organizational boundaries and variousdisciplines to achieve the sustainability goal of an NSD project. This study adopted Activity Theory tounderstand dynamics of complex service innovation system and model the actions taken by differententities in telehealth service projects, in which we identified important contradictions that affect thesustainability of newly developed services. Based on multiple case study findings, this research identifiedchallenges for these new service development projects such as user needs identification, the involvementof emergent technology and collaboration between entities from different industries. This studycontributes to the NSD research by proposing five propositions which could be used for guidingstakeholders to effectively manage NSD projects to offer sustainable newly developed services.

& 2013 Elsevier Ltd. All rights reserved.

1. Introduction

In today's economy, organizations must continuously reinventthemselves to adapt to increasingly complex and dynamic marketrealities (Coates, 2009). Organizations, including government, areunder pressure to sustain services in dynamic environments.Innovation is important for organizations that want to remaincompetitive. Service innovation is increasingly advocated by orga-nizations today. Despite the importance of service innovation,there are few guidelines that are based on actual cases ofsuccessful service innovation. Moreover, it is a challenge to trans-form an inter-organizational service innovation project into asustainable service business. In this paper, we present three casestudies that describe telehealth service projects that rely on thedigital transmission of medical data collected from patients incommunity health centers, private homes and nursing homes.Given the trend toward open service innovation, in which manybusiness entities are involved in the process of creating a newservice, the collaboration among the stakeholders involved in theservice delivery is important for the success of newly developedservices.

New service development (NSD) projects increasingly focuson the inter-organizational context of the process rather thanon a single service provider delivering value to customers

(Greenley and Foxall, 1998). The value of services can be deliveredthrough a service value network, where firms embrace partici-pants in the value co-creation service process. Thus, NSD issuesshould be addressed in the context of multiple stakeholders.Indeed, many firms adopted the principle of open innovation toacquire external resources to fill the gap on delivering value tocustomers. Moreover, the complexity and uncertainty of techno-logical innovation increase while absorbing diverse knowledgeacross organizational boundaries (Lin et al., 2012). This study seeksto advance from the description to a theoretical conceptualizationof the problems posed by an NSD project to understand how theproject team coordinated team activities. We require a theoreticaltool that enables us to understand how service development ismediated in this particular context and a theoretical perspectivethat can operate across different levels of analysis: individual,group and institutional. Activity Theory (AT) is a philosophical andcross-disciplinary framework for studying the simultaneouslyinterlinked individual and social levels of human practice in thedevelopment process (Kuutti, 1996). Because AT has been used toanalyze the contradictions in the activities of different subjects inthe development process, it is appropriate for this study to identifythe key factors that affect the sustainability of a newly developedservice. Thus, this paper investigates how inter-organizationalactors coordinate their activities, which may affect the sustain-ability of a service innovation project. Consequently, we identifythe research questions as follows:

(1) How do multiple stakeholders coordinate their activities in anNSD project in the inter-organizational context?

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[email protected] (P.-S. Hsieh).

Please cite this article as: Lin, F.-R., Hsieh, P.-S., Analyzing the sustainability of a newly developed service: An activitytheory perspective. Technovation (2013), http://dx.doi.org/10.1016/j.technovation.2013.08.004i

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(2) What factors affect new service sustainability in the inter-organizational context?

Based on qualitative interview data, this paper describes amultiple case study that involves NSD projects for telehealth inTaiwan. These cases have the common features such as theinvolvement of technologies in the new service delivery andthe heterogeneous project team composition in conductingnew service development projects. These characteristics are com-mon traits of a new service enabled by technologies in moderneconomic era. Thus, they represent a typical technology-enableservice development project, specifically in telehealth contexts.This research identified problems with coordinating, sharing anddeveloping expertise in these NSD projects among the variousinstitutional actors, i.e., motivating different stakeholders to shareand achieve common goals while retaining their individualmotivations and objectives. However, the problems that weidentified, such as motivations and contradictions, are essentiallydescriptive.

This paper begins with a brief overview of NSD and AT. Then,three telehealth service cases are described, including the back-grounds and the research contexts. The next section analyzes thecase studies and provides an explanation of the method. The NSDframework is described based on AT. This section is followed bymultiple case studies to explain why such service innovationprojects cannot be sustained. The paper concludes by presentingthe main findings and offering suggestions for further research.

2. Theoretical background

The complexity of tasks in a project demands the involvementof different stakeholders which, in general, could have different

objectives. Recently, specifically in healthcare contexts, Greig et al.(2012) investigated the team dynamics and the contradictionoccurred in objects of activities using Activity Theory in complexhealthcare problem in different settings. This study couldcontribute theoretical knowledge on sustainable new servicedevelopment in telehealth services by examining the contradic-tions occurred in NSD projects conducted by project teamscomposed of stakeholders with various domain specialties. Inaddition, AT focuses on the object of activity (Blackler, 2009),which is the aim towards people work collectively to meet anidentified need (Chaiklin, 2011; Engeström, 1999). AT incorporatesthe notions of intentionality, mediation, history, collaboration anddevelopment (Nardi, 1996) to understand human activities andwork practices. The unit of analysis is the entire activity as NSDprocess in the case study. Consequently, we adopted AT to analyzethe contradictions in the activities of different subjects in NSDprocess.

2.1. New Service Development (NSD)

To be able to develop new services has become an importantcompetitive practice for many companies (Johnson et al., 2000;Fitzsimmons and Fitzsimmons, 2000; Mansury and Love, 2008).Furthermore, it can be assumed that NSD is different from newproduct development (NPD) (Alam, 2002; Dolfsma, 2004; Stevensand Dimitriadis, 2004) because of the unique service character-istics of intangibility, heterogeneity, perishability, and inseparabil-ity (Lovelock, 1983; Shostack, 1977; Zeithaml et al., 1985). NSDrefers to an overall process of developing new services, from ideageneration to market launch. The NSD process is delivered througha service value network and can often be performed by multiplecompanies. The NSD research has been growing rapidly over latest

S1A1:Trend analysis of social economyS1A2:Trend analysis of technologyS1A3:Scope analysis of supply-sideS1A4:Scope analysis of demand-sideS1A5:Service needs analysis and service conceptualization

S1:Service Identification

S3A1:Product modelS3A2:Process modelS3A3:Resource modelS3A4:Marketing concept

S3:Service Modeling

S5A1:ServicerolloutS5A2:Servicemarketing S5A3:Service monitoring

S5:Service Commercialization

S2A1:Business model analysis of potential service concept S2A2:Service valuenet analysis and formation

S2:Service Value Net Formation

S4:Service Implementation

S4A1:Service prototypingS4A2:Service testing

Fig. 1. S–A Framework of an NSD Life Cycle (Lin and Hsieh, 2011).

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decades (Shoatack and Kingman-Brundage, 1991; Booz andHamilton, 1982), and generated many NSD models (Shostack,1984; Bowers, 1989; Scheuing, 1989; Cooper and Edgett, 2000;Johnson et al., 2000; Alam, 2006; Lin and Hsieh, 2011). Amongthese NSD models, Lin and Hsieh (2011) synthesizing prior modelsin stage, activity, and technique dimensions to generate SATframework to model a new service development project. More-over, this SAT framework emphasizes on open innovation practiceby integrating efforts of different entities of the service valuenetworks and feedback loop of development cycles (Fig. 1). Thisstudy adopted the SAT framework to model NSD projects tofacilitate researchers to identify contradictions occurred in differ-ent stages and activities. Therefore, we can turn execution contra-dictions to learning effects, which facilitates the discovery of newopportunities for the next cycle of service innovation. Table 1explains in details the activities of corresponding stages.

2.2. A brief review of activity theory

Activity Theory (AT) was originated in the former Soviet Union asa cultural-historical psychology by Vygotsky (1978). AT focuses onunderstanding human activities and work practices and incorporatesthe notions of intentionality, mediation, history, collaboration anddevelopment (Nardi, 1996). The unit of analysis is the entire activity.AT's principles and components have been used as analytical tools formany different subjects, including human-computer interaction(Kuutti, 1996), information systems (Bødker, 1991), interface design

(Bødker, 1990), communities of practice (Engeström, 1993) andeducation (Engeström, 1987).

An activity consists of a subject and an object mediated by atool. A subject can be an individual or a group engaged in anactivity. An activity is undertaken by a subject using tools toachieve an objective, thus transforming the activity into an out-come (Kuutti, 1996). Tools can be physical, such as a hammer, orpsychological, such as language, culture or ways of thinking.Computers are considered to be a special type of tool (a mediatingtool) (Kaptelinin, 1996). An object can be a material object, some-thing less tangible (a plan), or something completely intangible (acommon idea) provided that the object can be shared by theactivity‘s participants (Kuutti, 1996). Additionally, AT includescollective activity, community, rules and the division of labor,which demarcate the situated social context within which collec-tive activities are conducted. The community embedded in theactivity is composed of individuals who share an object with thesubject. Rules regulate the actions of and interactions with anactivity. The division of labor determines how tasks are distributedhorizontally between community members and corresponding toany vertical divisions of power and status. Activities always occurin a certain situation with a specific context (Engeström, 1987).Engeström (1987) formulated the activity context as a network ofdifferent parameters or elements that influence one another. Fig. 2shows Engeström's model of an activity system (1987).

As shown in Fig. 2, artifacts or tools mediate the relationshipbetween the subject and the object, and rules mediate therelationship between the subject and the community. Similarly,

Table 1Explanation of an NSD Process.Source: Arrange from Lin and Hsieh (2011)

Stage 1—Service identification Starting by identifying the trend of the social economy, the service scope, and the customer needs, a new developedservice has a better chance of sustainability in the target social economic context.

S1A1, Trend analysis of the social economy Trend analysis of the social economy is “broad scanning” and is defined as an information search in the externalenvironment.

S1A2, Trend analysis of the technology It is imperative to analyze the maturity of potential technologies to reduce the risks that result from the uncertainty oftechnology evolution.

S1A3, Scope analysis of the supply-side Firms should consider their capabilities to integrate, build, and reconfigure internal and external resources to adapt torapidly changing environments.

S1A4, Scope analysis of the demand-side Service providers have limited resources in developing new services. A service provider must analyze the scope of demandto mobilize resources to meet the demand.

S1A5, Service needs analysis and serviceconceptualization

Firms should first analyze customers' needs for service and then conceptualize the service as an innovative application.

Stage 2—Service value net formation A service is enabled through articulating values from many participant business entities, which collaborate in openinnovation networks to leverage individual uniqueness to generate value for stakeholders, including customers,service providers, and other involved entities.

S2A1, Business model analysis of thepotential service concept

Firms must determine their business model of the potential service concept to sustain the service.

S2A2, Service value net analysis andformation

The roles of the participants are identified and then a service value net is formed based on the interdependent relations ofthe participants' value propositions.

Stage 3—Service modeling Service modeling entails using the product, process, and resource model to connect service design andimplementation.

S3A1, Product model The product model offers many advantages: service product flexibility, rapid realization of innovative service products,fast and inexpensive software development.

S3A2, Process model Process modeling aims to analyze activities in delivering services, which may result in a cost-effective service model.S3A3, Resource model The resource model focuses on planning resources for performing the functions that the service requires.S3A4, Marketing concept The marketing concept is the market segmentation and the target market identification based on market research.

Stage 4—Service implementation Service prototypes are generated and tested before a selected service is launched onto the market.S4A1, Service prototyping Prototyping a service facilitates the communication between developers and customers and creates a variety of candidate

service models for various contexts.S4A2, Service testing Services can be simulated in protected environments to accelerate the NSD process. Certain variables can be considered,

such as price, quality and timeliness, as a new service is tested in its various aspects.

Stage 5—Service commercialization The developed service is commercialized when it is launched onto the market. In addition, it is necessary to monitorthe service delivery to perceive the responses from customers and employees.

S5A1, Service rollout Tasks include rollout strategies, rollout time, training employees, and producing a starter kit (for example, brochures,forms, process instructions, and service contents).

S5A2, Service marketing In addition to developing marketing plans, the marketing strategy developer may consider the four Rs: referrals, retention,related sales, and recovery.

S5A3, Service monitoring Firms must monitor the responses from the service delivery process to continuously enhance the service.

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the division of labor mediates between the community and theobject. AT describes an activity's hierarchical structure in threelevels. Each activity is conducted through actions of an individualthat are directed towards an object. An action is a single task witha goal that is performed to achieve a self-contained, pre-conceivedresult relevant to the overall activity. Actions are performed as asequence of operations. Operations are the work functions orroutines, with each action determined by the actual conditionsand contexts of the action during its performance. Fig. 3 shows thehierarchical structure of an activity (Kuutti, 1996).

In AT, activities are not static or given but dynamic. They changeand develop. This development occurs on all of the levels: newoperations are formed from previous actions when the participants‘skills increase. Correspondingly, at the action level, the scope of newactions is continuously increasing. In addition, entirely new actions arebegun, experimented with and adapted in response to new situationsor possibilities encountered in the process of transforming the object.Furthermore, on the activity level, the object, or motive, is reflected onand perhaps adapted in response to larger changes and other activities(Kuutti, 1996). AT contributes to analyzing NSD projects based on AT'sessential characteristics, which are listed as follows.

� AT is strongly contextual and oriented toward understandinghistorically specific local practices, their objects, mediating arti-facts and social organization (Cole and Engeström, 1993). In AT,contexts are viewed as internally contradictory transformations,which imply transformations and discontinuous development.

� AT is based on a dialectical theory of knowledge and thinkingthat focuses on the creative potential in human cognition(Engeström, 1999).

� AT is a developmental theory that explains the qualitativechanges in human practices over time.

� AT provides a comprehensive unit of analysis (McMichael, 1999).� AT helps to adequately maintain the relationship between

the individual and social levels in the objects to be studied,particularly to understand emergent features in individualand social transformation.

� AT is interventionist in its methodological approach (McMichael,1999).

Consequently, AT is an ideal theoretical approach to managethe important phases of the innovation process. The object of anactivity is achieved by group actions guided by goal-orientedindividuals. By taking advantage of its hierarchical structure ofdefining an activity, AT is suitable for understanding the designand analysis of complex systems, such as service innovation, inwhich it strongly emphasizes the interactions between subjectswith different environments to achieve their objects and result indifferent outcomes. In the process, AT can be used to model theirinteractions and describe the contradictions occurred in differentlevels of analysis.

2.3. Contradiction analysis

An important aspect of service innovation on organizationalresearch is characterized by contradictions (King et al., 1991) ortensions (Lewis et al., 2002). NSD projects have been increasinglyconducted in a multi-organizational context, where heterogeneousactors formed service innovation networks across organizationalboundaries (Greenley and Foxall, 1998; Ferneley and Bell, 2006;Gupta et al., 2006; Fichter, 2009). Different actors in a servicenetwork may have different objectives and preferable cooperativepractices, which could lead to conflicts (Pittaway et al., 2004).Klerkx and Aarts (2013) unraveled conflicts of multiple actors ininnovation networks. Moreover, many researchers have identifiedthat operating innovation networks is not easy, which involveschallenges, dilemmas, and paradoxes in this respect (Gilsing andDuysters, 2008; Håkansson and Ford, 2002; Pittaway et al., 2004).However, Engeström (1999) treated instability and contradictionsas a motivational force for change and development, and thetransitions and reorganizations within and between activity sys-tems were regarded as part of their evolution. Engeström (1987)identified four types of contradiction. Primary contradictions arethose found within a single node of an activity. This type ofcontradiction can be understood in terms of breakdowns betweenactions or sets of actions that realize the activity. These actionsare typically poly-motivated, i.e., the same action is executedby different individuals for different reasons or by the sameindividual as part of two separate activities. This poly-motivationmay be the root of the subsequent contradictions. Secondarycontradictions are contradictions that occur between nodes.Tertiary contradictions may be found when an activity is remodeledto accommodate new tasks or work methods. Thus, tertiarycontradictions occur between an existing activity and what isperceived as a culturally more advanced form of that activity.A culturally more advanced activity is one that results from theresolution of contradictions within an existing activity and mayinvolve the creation of new work practices (praxis), artifactsor divisions of responsibilities. Quaternary contradictions occurbetween different co-existing or concurrent activities (Turnerand Turner, 2001). Primary and secondary contradictions in anactivity may result in a new activity, which in turn results in a setof tertiary contradictions between the new activity and theoriginal activity, which may be compounded by quaternary contra-dictions with co-existing activities.

Because of the interests and needs of different stakeholders,contradictions are unavoidable. It is important to identify contra-dictions during the new service development process. The identi-fication of conflicts helps us to reflect on design strategies thatcan accommodate all interests and thus fulfill the stakeholders'objectives and satisfy their needs. Because activities in AT arenot static or given but dynamic, changing and developing, theyare influenced by other activities and changes in the environment.External influences change certain elements of activities, whichcauses imbalances between elements (Kuutti, 1996). These contra-dictions between the different stakeholders must be identified and

Fig. 2. Basic Structure of an Activity (Engeström, 1987).

Activity Motive

Action Goal

Operation Condition

Fig. 3. Hierarchical Structure of Activity (Kuutti, 1996).






addressed. Service network formation and value delivery relyheavily on the successful coordination of the stakeholders'dynamic relations and resources. The various objects that resultfrom differing incentives collectively form the cultural drivingforce of activity systems. Each subject in these activity systemscontributes his or her corresponding expertise according to adesignated role in a community in an effect to perceive, interpret,and formulate a goal and then act according to his or herpredispositions (Bedny et al., 2000).

3. Case Studies

In previous research on service innovation (Stuart, 1998), a casestudy approach was typically used to study and understandcomplex and dynamic processes (Adams and Schvaneveldt, 1985;Yin, 1994). The present study applies a qualitative research methodbecause the phenomenon under study is unstructured and athorough understanding is required (Orum et al., 1991; Bonoma,1985; Merriam, 1998). Moreover, qualitative research methods,such as multiple interviews (Pauwels and Matthyssens, 2004), areuseful in addressing a variety of evidences (Miles and Huberman,1994). The case study design is suitable when the purpose of thestudy is to obtain insight into a given phenomenon (Merriam,1998). This study adopts a holistic multiple case study design(Yin, 2003) for the following reasons. First, the research question –

“What factors affect new service sustainability in the inter-organizational context?” – is explanatory in nature, whichsupports the use of the case study design. Second, the phenom-enon under study in the NSD project involves a complicatedinteraction of individuals, technology, and the social context. Thestudy was conducted on three telehealth service projects thatwere partially funded by the Ministry of Economic Affairs (MOEA)in Taiwan and relied on the digital transmission of medical datacollected from patients in community centers, private homes, ornursing homes. The Telehealth Pilot Project was launched toexplore the benefits of providing telehealth services, particularlyto Taiwan‘s increasingly aged population (Yang and Hsiao, 2009).One benefit of the telehealth program is that it makes healthresources available close to patients' homes, which is important inthe care of patients, such as the elderly, who cannot easily accessmedical services. Providing adequate healthcare for seniors isan increasingly important concern in Taiwan. From the govern-ment's perspective, telehealth can also help to decrease healthcarecosts and facilitate the more effective deployment of healthcarepersonnel.

The sample was chosen from the healthcare organizations thathad offered telehealth services, which involved a large number ofstakeholders from health and social care services. Case A consistsof four hospitals responsible for four services, respectively: themobile nurse, the physician assistant, the healthcare angel, and themaster of health promotion services. The health care organizationin case B is the first Joint Commission International accreditedhospital in Taiwan. This 600-bed hospital provides comprehensivetertiary health care, including a 24-hour trauma center. The healthcare organization in case C is a Catholic hospital in Taiwandedicated to demonstrating the unselfish love and compassion ofChrist. For this study, 12 semi-structured interviews wereconducted with responsible representatives, including projectmanagers, from each of the principal groups involved in theactivities of planning, implementing and operating the projects.

We interviewed engineers and project managers responsiblefor infrastructure, marketing and promotion in the telecommuni-cation company in Case A. We also interviewed the key personwho initiated the project in case A and the main project leaders inhospitals of each case. Finally, we interviewed the vice president of

R&D department who integrated the expert system onto thehealthcare platform of Case B. The interview guide for the NSDproject managers comprised the following objectives: (1) back-ground information regarding the NSD telehealth project, (2) themultiple stakeholders' involvement in their activities in the NSDprocess, (3) resources allocation in the NSD process and (4) factorsthat affect new service sustainability.

We examined archival materials to gather additional back-ground information and to substantiate the interview data.In addition, we adopted an expert judgment technique (Coffeyand Atkinson, 1996) to select interviewees who could provideinsight into the particular behaviors and processes being studied(Adams and Schvaneveldt, 1985). We sought to mitigate subjectbias as much as possible by asking similar questions to all of themajor stakeholders. In addition, the interviews not only includedsite visits and informal communications but were also recordedand fully transcribed. The transcripts were deductively coded andthematically organized based on the literature to facilitate thecomparison of the different stakeholders and then inductivelyorganized according to themes generated by the interviewees toretain the original context and meaning (Miles and Huberman,1994). Because of the differing interests and needs of the stake-holders, contradictions were unavoidable. It is important toidentify contradictions during the new service development pro-cess. These contradictions between the different stakeholderswere identified and addressed. The following sections presentthe empirical results for the three cases. We adopted NSD frame-work to locate identified contradictions shown in Table 2, andempty rows denote that no contradictions identified from cases.

3.1. Case A: the mobile healthcare service project

Mobile technologies can play an important role in deliveringimproved healthcare services. The Mobile Healthcare ServiceProject was a project to promote mobile healthcare using WiMAXin Taiwan. The mobile health service was the joint effort of thetelecommunications company A, the software company A, andfour hospitals (Fig. 4). The project commenced in 2005 and endedin 2007. The project was partially funded by the MOEA (Ministry ofEconomic Affairs). There were four services developed by theproject: the mobile nurse, the physician assistant, the healthcareangel, and the master of health promotion services. The challengefor delivering this new mobile healthcare resulted from theindividual partners' interests. In the service prototyping activity,the project committee members expected that the telecommuni-cations company A could increase the number of WiMAX basestations that were required to construct from five to seven.In addition, the project committee members changed the originalproject plan to ask the hospitals to equip 11 ambulances withmobile technology, which resulted in resource re-allocationproblems. Although the four hospitals provided different services,they had a common goal: to provide better services to patients.The commercial organizations, such as the telecommunicationscompany A, considered the more service functions that could beembedded in the PDA (Personal Digital Assistant) or the mobiletelephone, the better the service testing activity would be.However, the hospitals were concerned about potential patientprivacy disputes. Moreover, for end-users to use the new service,the hospitals required insurance companies to join the projectcommunity. However, the insurance companies were not satisfiedwith the mere 300 advance members. In addition, the end-usershoped that the service could connect to the medical clinics forconsultation with physicians after the long-distance blood pres-sure reading. Otherwise, the end-users had no intention to use theservice, particularly if they had to pay for it.






3.2. Case B: Decentralized home telehealth system

Hospital B collaborated with the Software Company B, analliance of medical device manufacturers and an academic unit B(Fig. 5) to establish an MOEA telehealth project. The projectcommenced in 2007 and ended in 2008. Hospital B was a leaderin this project. However, the hospital was required to followthe MOEA's resource allocation rules. Therefore, in the servicemodeling stage of NSD, Hospital B could not adjust the otherstakeholders‘ resources during the project's implementation.The medical device alliances hoped to receive several thousandorders for medical devices. However, Hospital B hoped to decreasethe number of the users' physical health problems and total healthcare expenses. Furthermore, in the service implementation stage,

Hospital B could not provide medical devices without GMP(Good Manufacturing Practice) to the end-users after the servicetesting activity. In this project, primary care physicians played animportant role in staffing the call center. Using the call center andseveral electronic devices, physicians could continuously monitorand analyze the seniors' physiological data as a diagnostic refer-ence or to determine whether intervention was required. How-ever, the relationships between the call center and the primaryphysicians needed to be closer to provide better care to users.Additionally, the physicians could have contacted the seniors moreproactively if any unusual data were found. Therefore, Hospital Bneeded to convince physicians of the value of the telehealthservices, so that the physicians would be willing to join themedical advisory group. Moreover, the case manager was required

Table 2Contradictions occurred in three NSD cases.

Case A Case B Case C

Stage 1—Service identification n n n

Stage 2—Service value netformation

n n n

Stage 3—Service modeling n n n

S3A1, Product model n CB5: An Alliance of Medical DeviceManufacturers hoped to receiveseveral thousand medical deviceorders.

n

S3A2, Process modelS3A3, Resource model CA5: Lead company could not

control its resources according toservice needs.

CB4: Lead company could not adjustother stakeholders' resourcesaccording to projectimplementation progress.

CC3: Lead company could notadjust other stakeholders'resources according to projectimplementation progress.

S3A4, Marketing concept n n n

Stage 4—Service implementationS4A1, Service prototyping CA1: Project committee increased

the number of WiMAX base stationsfrom five to seven.

n CC1: There was a dispute aboutthe price of the medical devicebetween different stakeholders.

CA2: Project committee changedthe original healthcare servicesplan.CA6: Project team could not agreewith the project committee,which was only interested inhealth services based on WiMAX.

S4A2, Service testing: CA3: Insurance company was notsatisfied with the small number ofadvance members.

CB1: To set up telehealth facilitiesrequired much time for teammembers.

CC2: Users were concerned aboutthe price of the telehealth device.

CA4: Hospital needed to convincephysicians to join the medicaladvisory group.

CB2: Call Center members spentmuch time reminding users toperform physiologicalmeasurements.

CC4: Most community-based casemanagers were nurses who lackedconsideration for end-users.

CA7: Hospitals were concernedabout patient privacy in mobiletelephone services.

CB3: Loose coupling relationshipsbetween Call Center members andprimary physicians.

CC5: Case managers were forcedto address medical deviceproblems.

CA8: Hospitals wanted to controlservice quality, whereas the telecomcompany wanted to increase servicequantity.

CB6: Hospital needed to convincephysicians to join the medicaladvisory group.

CC6: Users did not accept complexvideo content.

CA9: It is too convenient for peopleto access healthcare services inTaiwan.

CB7: Hospital could not providemedical devices with GMP to end-users.

CC7: Hospital had to controlservice quality while satisfyingthe service quantity requirement.

CA10: End-users were concernedabout the price of the telehealthdevice.

CB8: It is too convenient for peopleto access healthcare services inTaiwan.

CC8: Hospital needed to convincephysicians to join the medicaladvisory group.

CB9: End-users were concernedabout the cost of telehealth services.

CC9: It was difficult to promotecommunity-based telehealth forend-users because certaincommunities lacked cohesion.CC10: It is too convenient forindividuals to access healthcareservices in Taiwan.

Stage 5—Servicecommercialization

n n n

Note: CXi denotes the ith contradiction of Case X;n denotes that no contradictions identified from case studies.






to arrange time with the seniors to set up the telehealth devicesand provide training at the homes of the seniors. This processrequired time but was not directly related to the quality ofthe telehealth service. In addition, 48% of the call center callsinvolved reminding the seniors to perform the physiologicalmeasurements instead of gathering information on the seniors'physical health problems. In fact, it is convenient for individualswho live in Taiwan to see physicians. Thus, the seniors assumedthat every healthcare service would be paid by the National HealthInsurance (NHI).

3.3. Case C: promoting community-based telehealth

Hospital C promoted the experience and the benefits of tele-health using a technical solution provided by company C andcontent provider C (Fig. 6). The project commenced in 2007 andended in 2009 and was partially funded by the MOEA. This projectsought to improve the quality of life for seniors by providingdigital art video. However, in the service testing activity, the

project team found that seniors were strongly reluctant to acceptvideo art because the content was too complex. Although hospitalC was a leader in this project, the hospital became involved in adispute with other stakeholders about the price of medical devicesduring the service prototyping. In the service implementationstage, when promoting the home health services to the public, theproject team realized that the price of the medical device shouldnot be too high because the device was not required for emer-gency medical care. The telehealth medical device was used tomonitor the seniors' physiological data. Thus, hospital C needed toconvince physicians to join the medical advisory group. Moreover,the community-based case managers were almost all nurses, whotypically care for patients in the hospital. Therefore, the hospitalswere required to teach the nurses that the seniors in the commu-nity preferred to receive other considerations in addition tophysiological measurement using the device. Additionally, thetechnical solution company C did not allocate medical devicemaintenance personnel. As a result, the case managers wereforced to address any technical problems that affected healthcareservice quality. In addition, it was difficult to promote community-based telehealth for seniors because certain communities lackedcohesion.

4. Research findings

NSD refers to an overall process of developing new servicesfrom idea generation to market launch. Service value is deliveredthrough a service network and can often be co-created by multiplestakeholders. We adopted the new NSD model (Lin and Hsieh,2011), which is not only nonlinear and rapid but also each stagecan return to any previous stages and further modify the outputsaccording to the execution feedbacks. Different types of contra-diction may occur in the activity system, i.e., primary, secondary,tertiary and quaternary contradictions. By identifying the tensionsand interactions between the elements of an activity system, it ispossible to reconstruct the system in its concrete diversity andrichness and therefore explain and foresee its development(Engeström, 1999). Although we found that many contradictionsoccurred during the service modeling and service implementationstages of NSD, we further traced the source of the contradictionsthat occurred during the NSD stages in order to facilitate NSDproject managers to take proper actions in earlier stages of servicedevelopment life cycle. Take case A illustrated in Table 2 as anexample, each contradiction was encoded as CAi, where CAidenotes the ith contradiction of case A, and the trace of contra-diction CAi was denoted as RAi identified in Tables 3 and 4.In service testing stage (S4A2), we found that end-users wereconcerned about the price of the telehealth device (CA10). We cantrace this contradiction rooted on the activity of service needsanalysis and service conceptualization of the first stage (S1A5)marked as RA10. The summary of contradictions with correspond-ing traces is shown in Fig. 7. Finally, we concluded seven commoncontradictions in Table 3 specific contradictions in Table 4occurred in three NSD cases based on AT. For example, in S1A3shown in Table 3, the secondary contradiction between stake-holders was identified that the hospital‘s division of labor contra-dicted the project team‘s objective. Notice that blank cells inTables 3 and 4 denote that we did not find any contradictionsfrom case studies.

4.1. Common contradictions concluded from three NSD case studies

With the emergence of an aging society, Taiwan's MOEApromoted information and communication technology (ICT) servicesto supply the needs of Taiwan's aging population. From the

Hospital 1 and Hospital 2Mobile nurse service

Hospital 4Health care angel service

Hospital 1Master of health promotion

service

Hospital 3Physician assistant service

Software Company AIntegrated mobile

healthcare platform

Telecom Company AProject management

Fig. 4. Mobile Health Care Service.

Hospital B

Integrated telecareservices

An Alliance of Medical Device Manufacturers

Physiological measurement technology

RFID technologyWireless technology

Academic Unit B

Expert systemPhysiological measurement

technology

Software Company BInformation systemInformation security

Fig. 5. Decentralized Home Telehealth System.

Content Provider Cdigital art video

digital art contents

Technical Solution company C

telecaremedical devices module function test

integration and system test

Hospital Chome-care model

institutional-care model community-care model

Fig. 6. Promoting the Experience and the Effect of Tele-care.






government's perspective, telehealth can also help to reduce health-care costs and facilitate the effective deployment of healthcarepersonnel. Therefore, these three projects were all partially funded

by the MOEA, and the healthcare organizations not only dependedon the technology vendors and the commitment of other firms butalso worked under the central authority of project committee

Table 4Specific Contradictions Identified in Each NSD Case Study.

Specific factor Stakeholders (Type of contradiction) Node of Activity Theory

Stage 1—Service identificationS1A1, Trend analysis of the social economy n n n

S1A2, Trend analysis of the technology n n n

S1A3, Scope analysis of the supply-side n n n

S1A4, Scope analysis of the demand-side Community cohesion (RC9) Hospital—End-users (Secondarycontradiction)

Tool—Community


n n n

Stage 2—Service value net formation n n n

Stage 3—Service modeling n n n

S3A1, Product model Technology (RA6) Hospital—Project team (Secondarycontradiction)

Tool—Tool

Medical device regulation (RB7) Hospital—Device company (Secondarycontradiction)

Rule—Tool

Service content (RC6) Hospital—Content provider (Secondarycontradiction)

Tool—Tool

S3A2, Process model Communication mechanism (RB3) Hospital—Hospital (Primary contradiction) Division of labor—Division oflabor

Division of labor and service delivery(RC4)

Hospital—Hospital (Primary contradiction) Division of labor—Objective

S3A3, Resource model Technology (RA1) Project team—Project team (Primarycontradiction)

Rule—Rule

Service application (RA2) Project team—Project team (Primarycontradiction)

Objective—Objective

S3A4, Marketing concept n n n

Stage 4—Service implementation n n n

Stage 5—Service commercialization n n n

Note: RXi denotes the ith trace of contradiction Case X, where X is A, B, or C;n denotes that no contradictions identified from case studies.

Table 3Common Contradictions Concluded from Three NSD Case Studies.

Common contradiction Stakeholders (Type of contradiction) Contradiction node of AT

Stage 1 - Service identificationS1A1, Trend analysis of the social economy n n n

S1A2, Trend analysis of the technology n n n

S1A3, Scope analysis of the supply-side Physicians' participation(RA4, RB6, RC8)

Hospital—Project team (Secondarycontradiction)

Division of labor—Objective

S1A4, Scope analysis of the demand-side n n n


Access to the healthcare service(RA9, RB8, RC10)

Hospital—End-users (Secondarycontradiction)

Tool—Tool

Cost of telehealth services(RA10, RB9, RC2)

Hospital—End-users (Secondarycontradiction)

Tool—Tool

Stage 2—Service value net formationS2A1, Business model analysis of the potential serviceconcept

n n n

S2A2, Service value net analysis and formation Operational goal (RA3, RA8, RB5,RC1)

Hospital—Commercial company(Secondary contradiction)

Objective—Objective

Resource allocation (RA5, RB4,RC3)


Rule—Division of labor

Stage 3—Service modelingS3A1, Product model n n n

S3A2, Process model n n n

S3A3, Resource model Division of labor in thespecialization(RB1, RB2, RC5)


Division of labor—Division oflabor

S3A4, Marketing concept Marketing concept (RA7, RC7) Hospital—Commercial company(Secondary contradiction)

Rule—Rule

Stage 4—Service implementation n n n

Stage 5—Service commercialization n n n

Note: RXi denotes the ith trace of contradiction Case X, where X is A, B, or C;n denotes that no contradictions identified from case studies.






members. We traced the causes of the contradictions back to severalcommon factors that affect new service sustainability in NSD, whichare explained as follows.

1. Stage 1—Service identificationPhysician participation. This factor is deduced from CA4, CB6and CC8 in Table 2 and expressed as RXi to denote the ith traceof contradiction Case X in Table 3.The patients thought that the long-distance blood pressureresults were meaningless without a physician's interpretation.Therefore, the hospitals were required to convince physiciansof the value of telehealth services so that the physicians wouldbe willing to join the medical advisory group. Thus, the projectteams must analyze the scope of the supply-side to achieve theproject team‘s objectives and distribute the labor at the begin-ning of the project.

2. Access to the healthcare service. This factor was induced fromCA9, CB8 and CC10 in Table 2 and expressed as RXi to denotethe ith trace of contradiction Case X in Table 3.It is convenient for individuals in Taiwan to see physiciansbecause of the high number of clinics. The telehealth providersmust identify the essential values provided to patients by tele-care technologies. Therefore, project teams must identify cus-tomer needs to adopt the appropriate engagement tools andprocesses to substitute tele-care for clinic appointments.

3. Cost of telehealth services. This factor was induced from CA10,CB9 and CC2 in Table 2 and expressed as RXi to denote the ithtrace of contradiction Case X in Table 3.The patients assumed that every healthcare service should bepaid for by National Health Insurance (NHI). Thus, in general,the patients did not accept the service if the clinics or hospitalscharged for it, which discouraged the patients from participat-ing given the high cost of accessing telehealth services. Inparticular, if tele-care is not an emergency medical service, andhome health services typically are not, a different chargescheme is required as an alternative to charging the tele-carereceivers. Project teams must analyze the patients' needs toprovide the proper tools and business models required toredeem the cost.

4. Stage 2—Service value net formationOperational goal. This factor was induced from CA3, CA8, CB5and CC1 in Table 2 and expressed as RXi to denote the ithtrace of contradiction Case X in Table 3, where X denotes CaseA, B, or C.The hospitals and the commercial companies applied differentlogic with respect to the service delivery and operational goals.For example, the medical device alliances hoped to sell severalthousand medical devices. However, the hospitals hoped todecrease the number of users causing physical health problemsand total health care expenses. Moreover, the hospitals failed toform a successful alliance with the insurance companiesbecause the hospitals could not supply a sufficient number ofcustomers for the insurance companies through the servicedelivery. Furthermore, the hospitals wanted to control theservice quality, whereas the telecommunications companywanted to increase the service quantity.

5. Resource allocation. This factor was induced from CA5, CB4and CC3 in Table 2 and expressed as RXi to denote the ithtrace of contradiction Case X in Table 3, where X denotes CaseA, B, or C.Hospitals were the leaders in the respective projects. However,the hospitals were required to follow MOEA rules regardingresource allocation. Therefore, a hospital could not adjust theother stakeholders' resources according to a project's imple-mentation progress. Moreover, the project teams could not obeythe rule that the project committee could only be interested ininvesting in telehealth services based on WiMAX. Accordingly,when project managers sought to establish a partnership withanother organization to integrate resources and values, theyneeded to clearly define each stakeholder‘s value, cost, and risk.Then, the project managers had to ensure that the differentstakeholders aligned their objectives and committed comple-mentary assets in providing value to customers.

6. Stage 3—Service modelingDivision of labor according to expertise. This factor wasinduced from CB1, CB2 and CC5 in Table 2 and expressed asRXi to denote the ith trace of contradiction Case X in Table 3,where X denotes Case A, B, or C.

S1A1:Trend analysis of social economyS1A2:Trend analysis of technologyS1A3:Scope analysis of supply-side (RA4)S1A4:Scope analysis of demand-sideS1A5:Service needs analysis and service conceptualization (RA9, RA10)

S1:Service Identification

S3A1:Product model (RA6)S3A2:Process modelS3A3:Resource model (CA5), (RA1, RA2)S3A4:Marketing concept (RA7)

S3:Service Modeling

S2A1:Business model analysis of potential service conceptS2A2:Service value net analysis and formation (RA3, RA5, RA8)

S2:Service Value Net Formation

S4:Service Implementation

S4A1:Service prototyping (CA1, CA2, CA6)S4A2:Service testing (CA3, CA4, CA7, CA8, CA9, CA10)

Fig. 7. The Trace of Contradictions of Case A.






The project team members were required to set up telehealthdevices in the homes of the elderly. As a result, the casemanagers were required to make appointments with the users.In addition, the engineers, case managers and nurses wererequired to teach the elderly how to operate the tools, whichwas time-consuming and did not contribute to service quality.The technical solution companies did not allocate medicaldevice maintenance personnel. Consequently, the case man-agers were forced to address any problems with the medicalequipment, which affected the healthcare service quality.Hospitals and project teams should establish a consensus ondistributing labor according to expertise.

7. Marketing concept. This factor was induced from CA7 and CC7in Table 2 and expressed as RXi to denote the ith trace ofcontradiction Case X in Table 3, where X denotes Case A, B, or C.The hospitals and commercial companies had different rulesregarding the promotion of the telehealth services. The hospitalswere in direct contact with the patients and had the medicalresponsibility for them. Consequently, the hospitals wererequired to control service quality despite having to satisfyservice quality performance requirements. The telecommunica-tions company desired to add more service functions to the PDAsor mobile telephones, whereas the hospitals were concernedabout potential patient privacy disputes.

4.2. Specific Contradictions in identified from each NSD case study

The type of health care organization involved in these threecases differs. For example, case A was administered by a group offour hospitals, case B was led by a private hospital, and case C wasmainly conducted by a Catholic hospital.

In case A, the Taiwanese government had invested in a newtelecommunication technology known as WiMAX in response tocompetition from around the world. Therefore, the project com-mittee members changed the KPI (Key Performance Indicators)in the number of WiMAX base stations from five to seven (RA1)and were only concerned about the diffusion of WiMAX services,whereas the hospitals did not have a stake in which technologywas used, particularly given WiMAX's technological uncertainty(RA6). Moreover, the project committee members thought thata better application of telehealth services would be mobileambulances. The concept of mobile ambulances was far from theoriginal project plan (RA2). In addition, certain stakeholdersfocused on pursuing a “technology-push” rather than “demand-pull” approach, which failed to meet customer needs. In thesecircumstances, the service business model was not coherent withthe revenue model or the core organizational values.

Case B was led by a private hospital, which invited 23 primarycare physicians to participate in the home-care project. In thisproject, the primary care physicians played an important role informing a Call Center. Using the Call Center and several electronicdevices, physicians could continuously monitor and analyzethe physiological data of the participating elderly patients asdiagnostic reference or to determine whether intervention wasrequired. However, in this case, we found that the relationshipsbetween the Call Center and the primary care physicians needed tobe closer to provide better care to the elderly (RB3) and that thephysicians could have contacted the elderly more proactivelywhen unusual data were found. In addition, hospital B could notprovide medical devices without GMP to end-users after theproject test stage (RB7). To further enhance the development oftelehealth in Taiwan, there is a need to amend the policies andregulations regarding the innovative service.

Case C was mainly conducted by a Catholic hospital, and thisproject emphasized the body, the mind and the spirit using

telehealth services. Therefore, the hospital collaborated with anart content provider and hoped to improve the quality of life of theelderly. However, the art content was too complex to be acceptedby the elderly (RC6). In addition, in this case, it was a regionalhospital that promoted the experience and the benefits ofcommunity-based complete telehealth. The project team wasrequired to design the service process model based on theobjective of distributing its labor during the appropriate serviceencounter. For example, the elderly in the community preferred toreceive considerations in addition to physiological measurementsusing the devices. However, the community-based case managerswere almost all nurses who usually cared for patients in a hospital,which represents a relatively confined environment comparedwith the variety of living environments encountered outside thehospital. Therefore, hospitals should arrange for social workers tocontact the elderly first to build trust in the service process modeldesign (RC4). Moreover, it was difficult to promote community-based telehealth for the elderly because certain communitieslacked cohesion. Community cohesion was disrupted by social,economic and environmental problems, which undermine feelingsof trust and security. Community cohesion is the strongest wherepeople have the opportunity and the capacity to participate intheir communities as fully as they wish and are treated equally.Assessing community cohesion is a challenge for hospitals in theimplementation of community-based telehealth services.

5. Discussion

Service innovation is important for transforming organizations.Currently, there are few guidelines available to guide organizationsin conducting service innovation projects. After recognizing manyNSD projects were not sustainably adopted by potential users, thisresearch presents three examples of NSD projects that were unableto sustain after they were implemented although a substantialamount of money was spent, including government funds. Weidentified contradictions (tensions) created between activity sys-tems to explain the causes resulting that few constructivelycollaborative actions were taken by stakeholders to co-configureservice processes to fulfill value propositions for one another. Thisstudy contributes to the field of inter-organizational NSD byexamining three cases of newly developed telehealth services toidentify the contradictions in the activity systems of the keystakeholders using Activity Theory. Moreover, this study demon-strates different industrial value configurations that aggregate andinteract in service value networks for service innovation in this newera of open innovation.

The differential outcomes of service identification, service valuenet formation, and service modeling in the mobile, home-basedand community-based telehealth services conclude the followingpropositions followed by elaborations.

Capabilities are “a set of business processes strategicallyunderstood… the key is to connect them to real customer needs”(Stalk et al., 1992). According to Leonard-Barton (1992), “corecapability is an interrelated, interdependent knowledge system.”Thus, hospitals cannot function without physicians, and the qualityof the care provided to the patients strongly depends on physi-cians's diagnoses. As we identified in this study (e.g., S1A3: RA4, RB6and RC8 in Table 3), the patients wished that the long-distanceblood pressure results could be examined by physicians. Hospitalscould offer effective incentives for physicians to participate in thetelehealth service delivery process in order to create the value oftelehealth services. Hospitals might define the scope of physicianparticipation according to such perspectives as legal, financial,corporate, or employment to institutionalize the participation of






physicians in telehealth services. Based on the above elaboration,we conclude Proposition 1 as follows:

Proposition 1. Stakeholders that clearly define their core capabil-ities and analyze the scope of participation of their employees aremore likely to create value to meet customer needs.

Sustainable service innovation requires identifying customers'needs and mature service provision technology. In this study, thestakeholders believed that the innovative services were difficult tocommercialize because they were based on the emergent WiMAXtechnology (e.g., S3A3: RA1, RA2 and S3A1: RA6 in Table 4). However,the stakeholders should have considered the risk when they weregranted the project. Consequently, this study suggests that stake-holders as value co-creators of a new service development projectshould pay closer attention to identifying end-user needs throughinterviews, focus groups, active, observation, or other means (Knight,1999; Witell et al., 2011), which in general are costly and time-consuming. Thus, the project should include the potential cost intime and expenditure of identifying customer needs in the projectbudget. For example, if the service providers had identified customerneeds using a service experience design, they would not haveprovided art content that was too complex for the elderly(e.g., S3A1: RC6 in Table 4). Based on the above explanation, weconclude Proposition 2 as follows:

Proposition 2. Stakeholders that carefully identify customerneeds and the maturity of service provision technology are morelikely to create sustainable service business models.

According to Mason and Swanson (1979), management isresponsible for allocating resources to achieve an organization'spurpose. The purpose is sometimes described as a vision or goal.The vision or goal is attained through the achievement of multiple(often numerous and competing) objectives. In case A, the conceptof mobile ambulances was far from the original project plan, andthe change of project deliverables resulted in tension with respectto resource re-allocation (e.g., S2A2: RA5 in Table 3). The leadingcompany could not adjust the other stakeholders' resourcesaccording to the project's implementation progress (e.g., S2A2:RB4 and RC3 in Table 3). To make rational resource re-allocationdecisions, an organization must identify or design alternatives,structure the organization's goals into objectives, measure howwell each alternative contributes to each sub-objective, and findthe best combination of alternatives subject to environmental andorganizational constraints. Business models have emphasized thedesign of the transactions of a firm in creating value (Amit andZott, 2001), the blend of the value stream for buyers and partners,the revenue stream, the logical stream (Mahadevan, 2000), andthe firm's core logic for creating value (Linder and Cantrell, 2000).In this study, we found that hospitals could perceive that theyshould form an alliance with other industries, which the patientswould pay for, such as the security and insurance industries(e.g., S2A2: RA3 in Table 3). However, hospitals and commercialcompanies used different logic in thinking about the servicedelivery and operational goals. For example, the medical devicealliances hoped to sell several thousand medical devices. However,the hospital hoped to decrease the number of health problems andtotal health care expenses (e.g., S2A2: RB5 in Table 3). We concludeProposition 3 according to the above description.

Proposition 3. Stakeholders who align their objectives andcommit complementary assets in providing value to customersare more likely to achieve NSD sustainability.

The behavior of frontline service employees is important tocustomer evaluations of the service encounter (Hartline et al., 2000).Organizations can create a sustainable competitive edge by providing

excellent service delivery (Grönroos, 2001). A service often involvesfrequent or extended person-to-person encounters between the front-line employees and consumers. In this study, the hospitals should havearranged for social workers to contact the elderly first to acquire theirtrust. Then, the case managers could have provided telehealth serviceinterventions because the elderly in the community preferred toreceive consideration in addition to the physiological measurementusing the devices (e.g., S3A2: RC4 in Table 4). In addition, to set up thetelehealth equipment demanded teammembers much time. Hospitalsand project teams should have established a consensus on distributinglabor according to corresponding expertise (e.g., S3A3: RB1, RB2 andRC5 in Table 3). Based on the above elaboration, we summarize it asProposition 4 as follows.

Proposition 4. Stakeholders who distribute the contact employ-ees according to customer evaluations of the service encounter aremore likely to design a sustainable service delivery model.

Medical service marketing is a specialized field that connectspatients, physicians, and hospitals in a special relationship due toits technically complex higher than most consumer services.In this study, hospitals had direct contact with patients and borethe medical responsibility; however, the other stakeholders didnot have such contact or responsibility. Therefore, hospitals andcommercial companies followed different business rules withrespect to promoting telehealth services. In this study, we foundthat different industries were expected by their partner industriesto play various legitimate roles in service delivery (e.g., S3A4: RA7,RC7 in Table 3). For example, the telecommunications companywas expected to deliver patient information using mobile services,whereas the hospitals were expected to provide professionalmedical services. The hospitals were expected to manage servicequality and patient privacy, whereas the telecommunicationscompany concentrated more on service functions embedded inPDAs or mobile telephones. Consequently, commercial marketersmay be required to meet the needs of publicly funded healthsystems (Sheaff, 2002). We conclude the above observation asProposition 5 as follows.

Proposition 5. Stakeholders that pay attention to service qualitywhile promoting the services are more likely to create a sustain-able service business.

6. Conclusion

A sustainable healthcare service requires clearly identified userneeds and mature technology, organization, and individual serviceproviders. Through a synthesis of relevant case studies ontelehealth service projects, we used activity theory to analyzethe telehealth service gap and identified major contradictions thataffected new telehealth service sustainability. The main reason forthe un-sustainability analyzed in this study is the lack of valueco-creation between the different stakeholders who participatedin the new service development project. Although each stake-holder intended to provide telehealth services, the stakeholdershad different objects. An additional challenge for these newservice development cases was the involvement of emergenttechnology and collaboration between entities from differentindustries. Thus, the more difference there is between thecollaborating entities, the more complex the coordination couldbe (Lawrence and Lorsch, 1967).

The objective of telehealth services is to use a call center andseveral electronic devices to enable physicians to continuouslymonitor and analyze the users' physiological data to facilitatediagnosis or intervention. However, physicians may decrease theirincome if they prescribe fewer drugs and perform fewer tests.Thus, the National Health Insurance (NHI) has been conducting






experiments on a capitation system to encourage physicians tofocus on preventive health care. Capitation enables healthcareproviders to pay more attention to patient care. The providers earnmore by taking better care of their patients. NHI provided anincentive for hospitals to maintain their relationship with patients.The innovation of a patient-centered perspective is essential forhospitals, and the business models for innovative diagnosis ortreatment developments are advancing toward a “solution shop”that uses disruptive innovation (Christensen et al., 2009).This study improves the understanding of how stakeholders caneffectively manage their NSD projects. Moreover, this studysuggests that diverse relationships should be managed carefullyfor firms to avoid being trapped in unsustainable new serviceofferings.

This research employing multiple case studies to identify contra-dictions occurred in new service development projects based onAT was constrained by static snapshots of dynamic service systems(Barab et al., 2002). It may fail to capture the evolution of subjects'motives and goals due to certain changes of conditions. An alter-native research approach using ethnography may be useful fortracing the activities performed in a project. The other limitationof adopting AT to analyzing service systems is the cost in terms oftime and efforts spent on resolving different aspects on the opera-tions and actions specified by researchers. The cost may hinder ATfrom becoming a production tool in monitoring the daily practice ofservice systems.

In future research, researchers in the area of telehealth servicecan conduct service design activities for new service developmentprojects based on the discovery of the contradictions (tensions)between involved stakeholders in the service systems to generateservice prototypes which take the sustainability of newly devel-opment service into consideration. In addition, we may examineother cases of cross-industrial and technology-enabled serviceinnovation to verify the proposed propositions. Moreover, throughthe comparison of multiple cases, we hope to develop a contextualtheory of cross-industrial and technology-enabled service innova-tion via empirical studies.

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Fu-ren Lin received the Ph.D. degree inInformation Systems from the University ofIllinois at Urbana—Champaign in 1996. He iscurrently a professor and founding chairmanof the Graduate Institute of Service Science,National Tsing Hua University (NTHU), Tai-wan. Prior to joining NTHU in 2004, Dr. Lintaught at the Department of InformationManagement, National Sun Yat-sen Univer-sity since 1996, and was a Fulbright visitingscholar to his alma mater in 2002–2003. Hisresearch interests include e-commerce, busi-ness process innovation, data/text mining,

knowledge management, and the emerging service science. In ServiceScience his interested topics include new service development, serviceexperience design, web service, and cloud service. He has publishedacademic papers in many journals, such as Journal of Service Science:International Journal of Electronic Commerce, Electronic CommerceResearch and Applications, Decision Support Systems, IEEE Transactions onEngineering Management IEEE Intelligent Systems, Journal of OrganizationalComputing and Electronic Commerce, and Information Processing andManagement. He has served as a guest editor for journals, such asInformation Systems and e-Business Management, and International Journalof Electronic Commerce Research and Applications. He is the associateeditor of INFORMS Service Science.

Peishan Hsieh is currently a doctoral candidatein the Institute of Technology Management,National Tsing Hua University, Taiwan. Herresearch works focus on inter-organizationalservice innovation and healthcare service policyand practice. Her major research approaches indealing with these domain issues are case studyand survey using theories such as StakeholdersTheory, Activity Theory, etc. Her research workshave been published in Journal of ServiceScience, and conferences, such as InternationalJoint Conference on Service Science and AnnualConference of the Academy of Management.



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Analyzing the sustainability of a newly developed service: An activity theory perspective

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