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The impact of service innovation on firm-level financial performance

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Abstract

This article empirically investigates if firms focusing on service innovation perform better financially than firms not focusing on service innovation. Analysis of the financial performance of 3575 Norwegian firms in the manufacturing industries supports the proposition that firms focusing on service innovation have significantly higher growth of operating results than firms not focusing on service innovation. However, this proposition is not supported in a corresponding analysis of 1132 Norwegian firms in the service industries. We elaborate on these results by investigating a variety of performance measures and by comparing the effects of service innovation between manufacturing and service industries. The article contributes to the service innovation measurement literature and to a better general understanding of the determinants of service innovation performance effects.

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... Tidd, Bessant, & Pavitt, 2005) traditional categories may be insufficient for service-related innovations (e.g. Bitran & Pedrosa, 1998;de Jong, Bruins, Dolfsma, & Meijaard, 2003) Service innovation may include both product and process innovations, or as de Jong et al. (2003) stated, due to the simultaneity of services, product and process innovations usually coincide (Aas & Pedersen, 2011). ...
... Many service innovations do not have very radical characters and have often already been implemented in other service organizations (de Jong et al., 2003). Another issue contributing to the complexity of service innovation is that its activities are found in both service and manufacturing firms (Aas & Pedersen, 2011). ...
... In the context of environmental uncertainty and competition, every organizations want to improve their own performances. Many studies have shown that innovation directly aff ects organizational performance (Aas & Pedersen, 2011;Dias & Escoval, 2013;Irwin et al., 1998;Wang & Hsu, 2014). Managers have recognized that innovative organizations provide competitive advantage (Dobni, 2000). ...
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In the context of environmental uncertainty and competition, organizations are trying to find new ways to improve their performance. The development of novelties based on innovation, especially in the service sector, is the departure point for many organizations. Intrapreneurship and organizational structure are important factors for organizations to improve the innovation performance. In this study, it is aimed to investigate whether intrapreneurship and organizational factors influence the innovation performance. The data were collected from a hospital by means of intrapreneurship scale, organizational factors scale and innovation performance scale. According to the results of Structural Equation Model analysis, intrapreneurship has positive influences on innovation performance. Organizational factors directly and indirectly affect innovation performance. Moreover, intrapreneurship has mediation effect between organizational factors and innovation performance. Lastly, Intrapreneurship enhances the effect of organizational factors on innovation performance.
... Service Innovation was measured by researchers, largely applying typologies such as: (i) product innovation, (ii) process innovation, (iii) marketing innovation, (iv) input innovation, (v) organizational innovation, (vi) marketing innovation, and (vii) strategic innovation ( Gadrey et al., 1995;Lin et al., 2008;Aas and Pedersen, 2011;Alpay et al., 2012;Tejada and Moreno, 2013) where the ¯rst two typologies were predominantly measuring technology innovation, and the later typologies were related in measuring non-technology based innovation. However, the major problem observed was that the above-named authors included and excluded certain typologies in their study measuring service innovation irrespective of the context they studied. ...
... Castro et al. (2011) stated that manufacturing companies have a greater tendency to carry out technological innovations, while service companies are more inclined to implement organizational and commercial innovations. Further, Aas and Pedersen (2011) concluded that all innovation types reported in Community Innovation Survey (CIS report), such as: product innovation, process innovation, organizational innovation, and marketing innovation, may be regarded as service innovations. Oslo Manual de¯nition stated that the four essential measuring service innovations, are, product innovation, process Table 1. ...
... In two stages approach, the model is ¯rst evaluated to get the reliability, validity, and latent variable scores and then the latent variable scores of the HOC are taken and remodeled to get the coe±cient () values. In Fig. 5 service innovation is considered as the HOC which is measured by seven major typologies derived from earlier literatures ( Gadrey et al., 1995;Lin et al., 2008;Aas and Pedersen, 2011;Alpay et al., 2012;Tejada and Moreno, 2013). For every typology a set of measurement items were developed. ...
Article
Purpose: The study is undertaken with two objectives, first to develop a scale that can measure service innovation from customer perspective in retail industry, and second to find out how the developed service innovation measurement scale has an effect on predicting customer’s Word-of-Mouth (WOM), followed by testing the mediation effect of corporate reputation between service innovation and WOM. Methodology: The study followed the Integrated Design Approach that included qualitative studies and quantitative studies in exploring and validating the measurement items for service innovation typologies. The codes that represent the typologies of service innovation were elicited through group discussions with selected customers and validated through in-depth interviews with decision maker/managers of retail industry in different parts of South India. The approved codes were validated through two expert opinion surveys and further authenticated through quantitative approaches such as: Exploratory Factor Analysis and Confirmatory Factor Analysis with two different sets of samples. Finally, the nomological validity of the developed scale was tested on estimating its effect on Corporate Reputation and WOM. Findings: The developed service innovation scale can be adopted by both researchers and managers in measuring service innovation in retail industry. The path analysis results concluded that service innovation has positive impact on corporate reputation and WOM, where the decision makers/managers can note that if service innovations are brought in frequently, it would make the firm reputed in the market and ultimately results in positive WOM from the customers. The mediation analysis result also gives an insight that even if the service innovation is by a non-reputed retailer, it still gets positive WOM. Originality/Value: The study contributes by providing a unique scale to measure service innovation from customer perspective in retail industry, overcoming the existing Goods-Dominant logic. Further, by empirically testing nomological validity, the effect on non-financial performance is estimated to understand how innovation in services would build corporate reputation that ultimately results in customers’ positive WOM which is wanting in literature on service innovation.
... As a result, there has been a significant interest in innovation implementation, particularly with respect to innovation culture and its effect on strategy and financial performance (Naranjo Valencia et. al, 2010;Aas and Pedersen, 2011;Christensen and Raynor, 2003;Govindarajan and Trimble, 2005;Hamel, 2002;Hammer, 2004;Senge and Carstedt, 2001). ...
... Our study contributes to the growing research that investigates the linkage between innovation culture, strategy and performance (Naranjo Valencia et al. 2010, Aas andPedersen, 2011;Christensen and Raynor, 2003;Govindarajan and Trimble, 2005). The case study provides additional support for the notion of complex and multi-dimensional aspects of both innovation and culture. ...
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Many organizations find themselves at the "front end of innovation", that is, they know they need to do something, but they are not quite sure what to do. Through our research, we have learned much more about the practice and implementation of innovation. For example, we have discovered that innovation is most successful if there is leadership support for a culture of innovation combined with systematic approaches to embed and reinforce innovative behaviours. This article outlines a case study of an organization in the financial services industry who began their innovation journey a number of years ago, and reports on the progress of a sustained and deliberate approach. This research highlights the relationship between an innovation cultural assessment model and its utilization as a framework to manage the implementation of activities to support the development of an innovation approach in a context specific scenario. A case study methodology was adopted that utilized an innovation culture model as a measurement tool. By actively observing the organization, including two cultural assessments over a 4-year period, the findings indicate that an innovation assessment model is useful as an approach to advance the innovation agenda in the organization. In this sense, the research findings are of interest to academics looking to conceptualize a broader implementation framework that is closely associated to the innovation measure associated with the organization. As well, practitioners looking to advance their innovation platforms will find the framework useful as they plan initiatives aimed at advancing their innovation agendas.
... Paradoxically, the marketing literatures on service innovation have been measuring the innovation with product and process innovation. It is only at a later stage, other typologies, namely, market innovation, input innovation, organization innovation and strategic innovation were added, and analyses in different service settings ranging from peoplecentric to equipment-centric services (Gadrey et al. 1995;Aas and Pedersen 2011). ...
... Service innovation was measured as a unidimensional construct with ten items which includes various typologies such as product innovation, process innovation, behavioral innovation, strategic innovation and market innovation, and the scaled items were adopted from the study by Wang and Ahmed (2004) and rephrased the questions where customers of telecom could answer further certain items related to employees were removed to ensure the reliability of the scale. Authors like Aas and Pedersen (2011) stated that all innovation types, such as product innovation, process innovation, organizational innovation, and marketing innovation, may be observed as service innovations (Barras 1986;Voss 1992;De Brentani and Cooper 1992;Flynn and Goldsmith 1993;Edvardsson and Olsson 1996;Edvardsson 1997;Sirilli and Evangelista 1998). The construct corporate reputation was measured using the scaled items developed by Walsh et al. (2006) and cross-buying intention was measured by adopting the items developed by Ngobo (2004). ...
Article
The study has been undertaken with following aims; first, to establish the plausibility of a positive relationship between service innovation and corporate reputation and their effect together on cross-buying intention of customers of telecommunication industry in India. Second, empirically examine the mediating and moderating effect of corporate reputation between service innovation and cross-buying intention. The descriptive approach was applied and tested by adopting a survey method where the sample units comprised of customers from various telecommunication service providers. Convenience sampling method was used based on which 256 customers of major service providers in southern part of India were approached for their opinion on the constructs. Smart—partial least square (hereinafter PLS) software tool was used to test the conceptual framework. On analyzing the result, it was observed that corporate reputation explained the relationship between service innovation and cross-buying intention; further corporate reputation also strengthens the effect of service innovation on cross-buying intention. The survey results indicate that decision makers/managers of telecommunication service firms need to understand that building reputation is one of the key aspects that would strengthen their initiatives of bringing service innovation frequently, as well as make their customers to cross-buy other services. The study fills the gap by analyzing the combined effect of service innovation and corporate reputation and cross-buying intention. Further, the study estimates the mediating and the moderating effect of corporate reputation between service innovation and cross-buying intention in telecommunication service settings which was not attempted earlier.
... Similarly, only a few studies are dedicated to assessing the impact of SI in manufacturing companies. For instance, Aas and Pedersen (2011) argue that SI positively affects firms' financial performance in the service and manufacturing industries. However, Eggert et al. (2015) state that manufacturing companies that invest only in SI do not improve their financial performance. ...
... The consequent constructs are financial performance (FNP) and non-financial performance (NFNP). These two constructs were based on several studies (Aas and Pedersen, 2011;Wang et al., 2018). For the digitalization construct (TECDIG), which is the moderating construct, we developed a scale based on the use of digital technologies. ...
Article
Purpose This study aims to validate a model of relationships between critical factors such as service strategy, culture-climate, leadership, customer involvement, technology strategy and service innovation (SI). Moreover, it investigates the impact of SI on a company’s performance and the moderating role of digitalization in the relationships between critical factors and SI. Design/methodology/approach Primary data were collected through a survey and partial least squares structural equation modeling was used to analyze the collected data and test the research hypotheses. Findings The results suggest positive associations of service strategy toward culture-climate, leadership, customer involvement and technology strategy in terms of significance and effect size. However, only two factors (e.g. customer involvement and technology strategy) positively influence SI, which affects financial and non-financial performance. Furthermore, digitalization does not strengthen the influence of four antecedents (i.e. culture-climate, leadership, customer involvement and technology strategy) in SI. Originality/value First, the study provides a comprehensive framework of SI critical factors and their impact on company performance. Second, it links servitization, SI and digitalization. Third, it tests the effects of digitalization.
... In an investigation performed, the authors indicated that only 10% of the innovative process is influenced by inspiration, and power of imagination, while 90% of the innovative process is influenced by efforts, and endeavor (11). Within this context, the concept of innovation can be defined as "The product of inspiration, and power of imagination reinforced by efforts" or "Novelty produced by creativity in any subject" (14). ...
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Objective: With this study we aimed to investigate whether some variables (number of levels, departments, and horizontal communication etc.) in organizational structure of the hospitals operating within the frame of public health sector of the Metropolitan City of Istanbul have an impact on innovation, to determine the way these variables effect innovation, and evaluate innovative performance of our hospital within the frame of organizational innovative culture. Material and Method: For this investigation literature screening was made, and a questionnaire consisting of three parts was prepared. First part of the questionnaire contained institutional information, the second part comprised organizational information, and the third part consisted of questions aimed to determine the innovational value of the applications. The questionnaire forms were sent to 190 healthcare professionals. A total of 137 forms were completed by the participants, and returned to us. However only 112 questionnaire forms were taken into consideration for evaluation. The data obtained were analyzed using SPSS. Results: Hypothesis 1: Any correlation does not exist between the age of the hospital, and innovativeness (r=-0.276 p=0.004). Hypothesis 2: Any correlation does not exist between innovativeness, and formality in horizontal communication between hospital professionals of the same level (r=0.111 p=0.249 Kendall's Tau_b=0.062). Hypothesis 3: A significant correlation does not exist between the communication between hospital employers, and their superiors, and innovativeness (r= 0,220 p=0.022). Hypothesis 4: A correlation does not exist between the horizontal communication prevalent among hospital employees at the same level, and innovativenes (r=0.159 p=0.099 Kendall's Tau_b=0.145). Hypothesis 5: A difference does not exist between the general level of communication in the hospital, and innovativeness (r=0.305 p=0001). Hypothesis 6: A correlation does not exist between the number of departments in the hospital, and innovativeness (r=-0.141 p= 0.152 Kendall's Tau_b=-0.119) Hypothesis 7: A correlation does not exist between the number of vertical levels in the hierarchy of hospital organization, and innovativeness (r=0117 p=0.234 Kendall's Tau_b= 0.90). Conclusion: The outcomes of our study can be interpreted as follows: a) Newly established hospitals participating in our study were more innovative, b) Increased communicative relationship between employees, and their superiors, and also between workers at the same level, consequently among all hospital professionals reinforce innovativeness, c) as the number of departments increase, rapport, and communication weaken which decrease innovativeness, d) in hospitals with higher number of vertical levels, innovativeness is promoted in that the presence of more participative management, and effective communication channels facilitate implementation of innovative applications. Innovation, organizational structure, communication, health, hospital About Article
... The relationship between innovation and firm performance has been discussed widely in previous studies (e.g., Aas & Pedersen, 2011). Theoretically, the role of innovation on firm performance cannot be explained from a single perspective. ...
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This study is the first to study the lasting effects of innovation on firm profitability in Vietnam. Using a unique panel dataset for the period 2005–2015, our results show that innovators achieve higher profit in comparison with non-innovating firms. The positive effects of innovation on firm profitability are observed not only in the short term but also in the longer term. The benefits of innovation for firm profitability can be seen in higher export probability, better productivity, better access to formal credit, and the ability to secure government support, but only after innovation.
... Former studies about measuring innovation performance can be divided into two methods: (1) one method measures the innovation performance based on a firm's R&D performance (Baumann & Kritikos, 2016;Bronzini & Piselli, 2016). This method emphasizes the standard technical achievements, which mainly relate to technology innovation activities, including the patent authorization number, technical market turnover, the publication Recognition of entrepreneur's social ties and firm innovation in... number of the academic papers, the number of new products, and the number of products with major improvements, etc. (i.e., Henderson & Clark, 1990;Romijn & Albaladejo, 2002;Sørensen & Stuart, 2000); (2) Another method measures innovation performance based on a firm's financial performance, which can reflect the improvement of the financial performance triggered by innovation activities (e.g., Aas & Pedersen, 2011;Dunk, 2011;Kostopoulos, Papalexandris, Papachroni, & Ioannou, 2011). Both methods are focused on innovation results without enough consideration of the innovation process. ...
Article
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Despite the extensive attention to the role of entrepreneurs’ business or political ties, few studies have distinguished the basis of those social ties. The aim of this study is to explore the different roles of the entrepreneurs’ personalized and formal social ties on the firms’ innovation performance. Based on renqing and formal rules, this study extends the social ties’ typology into four categories, namely, transactional business ties, transactional political ties, guanxi business ties, and guanxi political ties. Using data collected from 209 Chinese firms, we further identify the distinctive contributions of the different ties on the entrepreneurial firm’s innovation performance under different institutional environments and entrepreneurs’ survival pressure. This paper will help researchers and managers better understand the function of social ties in innovation in emerging markets, such as China.
... In theory, service innovation can increase the added value of enterprise products and create greater benefits for enterprises [5], but the research on the relationship between service innovation and firm performance has contradictory results. Some studies have shown that service innovation can have a direct and significant positive effect on firm performance [6], while other studies believe that service innovation has little effect on firm performance [7]. Therefore, although scholars agree with the value of service innovation, there is no unified conclusion on whether it can improve corporate performance. ...
... Which makes them potentially complex and ambiguous (Vaccaro et al., 2012) and often unique to the firms that adopt them, making it difficult to replicate (Birskinshaw, 2006). These characteristics make management innovation one of the main sources of competitive advantage of firms (Mol & Birkinshaw, 2009;Volberda et al., 2013); however, this type of innovation remains as a poorly researched subject (Hollen, Van den Bosch, And Volberda, 2013), although in the services, play a relevant role (Aas & Pedersen, 2011;Gallego et al., 2013). ...
Chapter
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The concept of management innovation, the characteristics of the services, as well as the multiple ways in which innovation can occur in services make it difficult to measure the result of the influence of management innovation on performance. Based on the rational and institutional perspectives relevant in the study of the effects of management innovation, the objective of this chapter is to analyze how the introduction of this type of innovation determines the performance of service firms. Thorough analysis of the literature suggests that the innovative challenge of service firms focuses not only on technological innovation but also on management innovation focused on economic and/or social potential. The characteristics of management innovation as well as the ability of service firms to integrate different types of innovation enable them to achieve distinct competencies and high sustainable performance in the form of economic and social gains.
... Empirical studies of the consequences for manufacturing firms that add services frequently rely on surveys and self-reported financial data to measure both explanatory and dependent variables (Aas and Pedersen 2011;Antioco et al. 2008;Eggert et al. 2011;Gebauer and Fleisch 2007;Kohtamäki et al. 2013), thus creating the potential for systematic common method bias and survivor bias. To address these issues, our study draws on objective and certified financial performance data in the context of new manufacturing ventures (Portuguese industry code 10-33) that are tracked since firm registration. ...
Article
We investigate the association between service intensity and the survival odds of new manufacturing ventures. Although previous research extensively addresses the value of servitization in established firms, this is the first empirical study that asks whether service intensity, defined as the percentage of sales from services, is beneficial or detrimental to new ventures. Drawing on resource-advantage theory, we further ask whether, under increasing service intensity, new ventures with a higher industry-adjusted ratio of tangible to total assets, labor productivity, or current ratio improve survival odds. Based on a comprehensive data on 6,683 new Portuguese manufacturing ventures founded between 2006 and 2010 and followed until 2015 (33,272 venture-year observations), the results show that higher service intensity lowers the odds of survival. For entrepreneurs, we caution against higher service intensity but demonstrate that survival odds can improve under increasing service intensity when the company can achieve a higher industry median–adjusted ratio of tangible to total assets, improved labor productivity, or a stronger current ratio position. The findings are robust after controlling for endogeneity and self-selection into services.
... Performance(Szymanski et al., 2007;Freel and Robson, 2004;Grupp and Mogee, 2004;Aschhoff and Schmidt, 2008;Alegre et al., 2009;Lin et al., 2011; den Hertog et al., 2011;Spithoven et al., 2010;Brenner and Broekel, 2011;Melnyk et al., 2010;Thomae and Bizer, 2013;Birchall et al., 2011;Hsieh, 2011;Aas and Pedersen, 2011;Hall et al., 2013;Amore et al., 2013;Edison et al., 2013;Hsu and Chuang, 2014;Saunila and Ukko, 2012). ...
... Service innovation was measured by various typologies such as product innovation (four items), process innovation (three items), behavioural innovation (four items), strategic innovation (three items) and market innovation (two items), and the scaled items were adopted from the study by Wang and Ahmed, (2004). Aas and Pedersen (2011) stated that all innovation types such as product innovation, process innovation, organisational innovation, and marketing innovation, may be observed as service innovations (Barras, 1986;Voss, 1992;De Brentani and Cooper, 1992;Flynn and Goldsmith, 1993;Edvardsson and Olsson, 1996;Edvardsson, 1997;Sirilli and Evangelista, 1998). The construct corporate reputation was measured using the scaled items developed by Walsh et al. (2006) and cross-buying intention was measured by adopting the items developed by Ngobo (2004). ...
Article
The aim of this study to examine the reciprocal relationship hypothesis between attitude towards advertisement (Aad) and brand attitude (Abr), and how they influence the customer purchase intention (PI) with how Aad and Abr act as a mediator in predicting the PI. There was a reciprocal relationship between Abr and Aad. The perfect mediation of Abr between Aad and PI explains the Aad is mediated by Abr to determine the PI of the product. The pathway from Aad through the mediator (1) Abr predicts PI better than the second pathway, from Abr through the mediator (2) Aad on predicting PI. The causal sequence of Aad → Abr → PI relationship tested in the existing studies considered attitude towards brand as a best mediator in the relationship between Aad and PI, whereas in the second path of Abr through the mediator (2) Aad did not support the predicting of PI.
... Service innovation was measured by various typologies such as product innovation (four items), process innovation (three items), behavioural innovation (four items), strategic innovation (three items) and market innovation (two items), and the scaled items were adopted from the study by Wang and Ahmed, (2004). Aas and Pedersen (2011) stated that all innovation types such as product innovation, process innovation, organisational innovation, and marketing innovation, may be observed as service innovations (Barras, 1986;Voss, 1992;De Brentani and Cooper, 1992;Flynn and Goldsmith, 1993;Edvardsson and Olsson, 1996;Edvardsson, 1997;Sirilli and Evangelista, 1998). The construct corporate reputation was measured using the scaled items developed by Walsh et al. (2006) and cross-buying intention was measured by adopting the items developed by Ngobo (2004). ...
Article
This study empirically established the reciprocal relationship between service innovation and corporate reputation and its effect on cross-buying intention with mediation effect of service innovation between corporate reputation and cross-buying intention. The findings established that there is a reciprocal relationship between service innovation and corporate reputation and that both the constructs independently influence the cross-buying intention of the customer. The result further clarifies that there is the least combined effect of service innovation and corporate reputation on cross-buying intention, which means that service innovation and corporate reputation do not mediate the other variable’s relationship with cross-buying intention. The findings help the managers/decision makers of a telecommunication service firm to understand that customer may cross-buy a product/service even from a non-reputed firm if the product/service is innovative. On the other hand, customers might cross-buy a product/service if it is from a reputed firm where the product/service may not always be innovative. Thus, for a new firm (which is less reputed in the market), service innovation helps in cross-selling whereas cross-selling of service is comparatively easier for a reputed firm even in the absence of innovative idea.
... Firms innovate services and/or modify the existing service in order to attain customer satisfaction and competitive advantage (Fitzgerald et al., 1991;Voss, 1992;Deshpande et al., 1993;Avlonitis et al., 2001;Damanpour et al., 2009) which is termed as service innovation. According to Menor et al. (2002) service innovation is aA contribution not previously available to a firm's customer, ensuring the addition of a service offering or change in the service idea that allows the service offering to be made available".. Existing researchers (Gadrey et al., 1995;Aas and Pedersen, 2011;Cheng and Krumwiede, 2012) According to McAdam and Armstrong (2001), innovation and service quality are two key management terms that has been adopted by organisations in order to attain financial and/or non-financial performance. Moreover, there is an intrinsic link between innovation and service quality over a wide range of business improvement activities (Parasuraman, 2010;Lin, 2012). ...
... Innovation in services therefore has a major role to play in financial performance of firms. For instance, an empirical study of Norwegian manufacturing firms observes significant contribution of service innovation to higher operating results of manufacturing firms than their peers (Aas & Pedersen 2011). ...
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This article examines the speed of adjustment of firm performance to financial innovations usage and the speed of adjustment of financial innovation to financial innovation drivers for banks in Kenya. We used the Koyck distributed lag model, which is estimated using dynamic panel estimation with System Generalised Method of Moments. We find that it takes on average 1.179 years for bank financial performance to adjust to the four financial innovations studied. Secondly, it takes less than a year (0.368 years) to accomplish 50% of the total change in firm performance following a unit-sustained change in the financial innovations. Moreover, mobile banking has the shortest mean lag (2.849), while Automated Teller Machines (ATMs) have the longest mean lag (4.926). Notably, it takes approximately three years for mobile banking to adjust to financial innovation drivers at firm level and on average five years for ATMs to adjust to the financial innovation drivers.
... In this regard, Wu (2014) argues that service companies can achieve a sustainable competitive advantage only by grouping novelties in goods with value-added services, which increase customer loyalty and retention. In a specific way, in the trade sector, innovations are evidenced in the elements of operational strategic marketing, in which Aas and Pedersen (2011);Yang, Yang and Chen (2014) argue that service innovation can help organizations differentiate themselves from their competitors; As well as increased customer loyalty (Wu, 2014). ...
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This paper aims the innovation at services in commercial textiles companies and health care services. The project reviews the types of innovation and the characteristics present at the both sectors. The results establish the textile trade and health care services have low dynamism in innovation activities. This work proposes a cyclical process for the development of innovation at services: analysis, focus goals, equipment, partnerships, project tracking, feedback, deployment and implementation; supported in the organizational culture. This work proposes a management tool for companies inspired by the theoretical study of characteristics of innovation and the empirical study at the service sector.
... Bowen et al. (2010) define financial constraints as the incapacity of a firm to obtain the necessary financial resources to enable them to fund their investment and growth. In support Aas et al. (2011) suggest that a firm is said to be financially unconstrained if it has the ability to implement its innovation projects at optimal scale, and is financially constrained if it is not capable of doing so owing to a shortage in funding. ...
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The study investigated the impact of liquidity constraints on development of new financial products in commercial banks. The descriptive research design was adopted and a case study of ZB Bank employed. A census sampling technique was adopted and questionnaires and interviews were self-administered by the researchers. Research outcomes proved that liquidity constraints are a major impediment to firm`s innovativeness. Financial project innovations are either not started, delayed or abandoned, but mostly the distribution and delivery of developed services for financial products are highly affected. The results of this study have contributed to existing literature in revealing that financial regulation tends to be another constraint for commercial banks discouraging product innovations. Rapid technological changes seem to fuel the need for new software and hardware for new product development thus necessitating the employment of a skilled workforce for new product development. Furthermore, customer demands are changing on a daily basis due to rapid changes in information technology thus making customer maintenance difficult for commercial banks. Based on the data gathered, the researchers concluded that there is a negative impact on new financial product development due to liquidity constraints. In such constrained times, we recommend that commercial banks should emphasize more the best technique suitable for successful new product development or invest their available funds in the development thereof.
... The empirical results of their study indicated that non-conventional firm have the highest degree of service innovation and they financially outperform general firms. In industrial markets, in which many suppliers find it increasingly difficult to differentiate their products effectively from competitors' offerings, service innovations provide an important source of competitive advantage that ultimately might lead to improved financial performance (Eggert & Thiesbrummel & Deutsche, 2014;Aas & Pedersen, 2011;Cainelli, Evangelista & Savona, 2004). ...
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The relationship between service innovation and business performance in the hotel sector in Zimbabwe has become one of the most important aspects in Service Industry. The dearth of knowledge in service innovation has led to the current study. The study explored service innovation capabilities towards financial performance, customer retention and reputation of hotels. Three hypotheses are posited and in order to empirically test them, a sample data set of 150 was collected from the African Sun Hotel group (ASHG) and Rainbow Tourism group (RTG) of hotels in Zimbabwe. The findings indicated that service innovation positively influences business performances in hotels. The study contributes to practice by helping hotel managers to devise appropriate service innovation strategies and make informed decisions and it gives fresh contemporary evidence supported by reliable information that contributes to the body of knowledge and gives a leeway into further research.
... In industrial markets, where many suppliers find it increasingly difficult to differentiate their products effectively from competitor's offerings, service innovation provides an important source of competitive advantage which ultimately can lead to improved financial performance (e.g. Aas and Pedersen, 2011;Cainelli et al., 2004) . Regardless of the sector examined, several studies show that service innovation can have a positive impact on company performance (Cheng and Krumwiede, 2012; Dotzel et al., 2013). ...
Article
Small businesses in the food and beverage sector are currently experiencing rapid development, including in Indonesia. Unfortunately, many of these small businesses cannot survive for long. In Indonesia alone, a three and a half year survival rate is set by the Ministry of Cooperatives and Small to Medium Enterprises (SMEs) (KUKM) for someone to be called an entrepreneur. The purpose of this study was to determine the effect of financial performance and service and product innovation on the survival of small businesses mediated by TAM. The method of this research is a quantitative approach using SEM Lisrel. The sample of this research is food and beverage SMEs in Jabotabek by selecting purposive samples obtained from 200 respondents. The results of this study are based on the results of the analysis and discussion found that the variable Financial Performance proved to have a positive effect on Business Survival. Variable Service and Product Innovations proved to have a positive effect on Survival Enterprises and TAM has a moderate effect on the performance of finance and product innovation and services to survive SMEs.
... Product development has an impact on both financial and non-financial performance. TH Aas and PE Pedersen prove that firms perform better financially if they concentrate on service innovation than firms that do not focus on service innovation (Aas and Pedersen 2011). They pointed out that, "Analysis of the financial performance of 3575 Norwegian firms in the manufacturing industries supports the proposition that firms focusing on service innovation have significantly higher growth of operating results than firms not focusing on service innovation". ...
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This study investigates the mediation effect of motivation (MO) between internal marketing (IM) and service innovation (SI) using a hierarchical model. It adopts Bahman Group Corp of the automobile industry in Iran as a case study. This paper aims to examine the effect of internal marketing (IM) on service innovation (SI) by the mediation effect of motivation (MO). It develops a theoretical hierarchical multi-component model and analyses through a two-step approach of higher-order model by using PLS on 171 clean data. This research uses a survey method to collect data from the employees of Bahman Group Corp. The results indicate that motivation (MO) has a partial mediation effect between internal marketing (IM) and service innovation (SI). This study illustrates that internal communication (IC) and a New Organizational Delivery system (NOD) have the most substantial effect on internal marketing (IM) and service innovation (SI). Moreover, this research highlights to the service-based organisation to pay more attention to enhance internal marketing dimensions, especially in terms of service innovation to improve competitiveness. The results recommend further studies to examine the correlation between each indicator. The findings conclude with two main contributions and managerial implication to the research area that impactful to the subject of study.
... As a result, organizations with improved human capital can increase their capability to grip the multifaceted processes that complement change (Kimberly & Evanisko, 1981;Young et al., 2001) and generate new understanding (Nieves, 2015). Supporting this Aas and Pedersen (2011) argued that firms concentrating on service innovation have considerably greater productivity (sale proceeds per worker) development than businesses not concentrating on service innovation. ...
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This study intends to examine whether hotels' human capital innovation initiatives are an important predictor of service innovation performance. For meeting the objectives of the study, the data was collected using a questionnaire from 245 staff members working in an A category hotel's in Jammu and Kashmir using a non-probability convenience sampling technique. Structured equation modeling was used to test the hypothesis. Results revealed a positive impact of human capital innovation on service innovation. Further, the study found a significant impact of service innovation on employee performance and competitive advantage. The results enriched the knowledge regarding human capital innovation by revealing its influence on the hotel industry's service innovation performance in the form of competitive advantage. The study also leads to a number of future research directions for researchers as well as academicians.
... Each of these constructs contained five items. Service innovation was measured through two constructs (product and process innovation and organisational innovation) adapted from Aasa and Pedersen (2010). The three constructs for sustainability performance (environmental, social, economic sustainability performance) were adapted from Abbas (2020) ...
Article
Purpose This study aims to critically investigate the structural relationships between total quality management (TQM), service innovation and sustainability performance in the public service sector of the United Arab Emirates (UAE). Design/methodology/approach The study employed an online survey to collect data from 400 employees working in eight selected UAE public service sector organisations located in Abu Dhabi. The collected data were analysed using structural equation modelling (SEM) to empirically examine whether TQM practices improve service innovation and, subsequently, sustainability performance in the UAE's public service sector. Findings The results show that TQM has a significant impact on service innovation and sustainability performance in the UAE's public service sector. Additionally, service innovation partially mediates the relationship between TQM and sustainability performance. Practical implications The public service sector's TQM practices and service innovation in the UAE have a much greater impact on social and environmental sustainability than on economic sustainability performance. Adopting five dimensions of TQM (following the Abu Dhabi Award for Excellence in Government Performance [ADAEP] model) across the UAE's public organisations will enable government departments to deliver innovative services to its beneficiaries. Originality/value This study provides a substantial contribution by addressing the gaps in the literature. Very few studies have empirically investigated the possible association between TQM, service innovation and sustainability performance in public sector organisations, particularly in developing countries such as the UAE, where the increasing efforts in TQM practices are still in their emerging stages, mainly targeting innovative service offerings and sustainable performance.
... As a result, organizations with improved human capital can increase their capability to grip the multifaceted processes that complement change (Kimberly & Evanisko, 1981;Young et al., 2001) and generate new understanding (Nieves & Cipres, 2015). Supporting this Aas and Pedersen (2011) argued that firms concentrating on service innovation have considerably greater productivity (sale proceeds per worker) development than businesses not concentrating on service innovation. ...
Article
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Based on service dominant logic (SDL) and resource-based view (RBV), this study investigates the impact of service innovation-underlying dimensions, namely, technological innovation, organizational innovation and human capital innovation on market performance and employee productivity in the hospitality industry. The study also validates and confirms the multidimensionality of service innovation in the hospitality industry. Perceptions of 400 hotel managers were used to explore the relationship. Exploratory factor analysis and confirmatory factor analysis followed by structured equation modeling were employed to examine the data. The empirical results indicate that the three-dimensional model provides a solid foundation and accomplishes an excellent fit for data. Empirical results suggest that service innovation has an influential impact on market performance. Similarly, results demonstrate that service innovation has a positive influence on employee productivity. These findings offer insight into dimensionality and consequences of service innovation for academic research and bring value to service contexts particularly hospitality.
... Service importance and actionable implications for managers considering brand sales behavior and position Eckert (2013) conducted an economic-based review of empirical studies of gasoline retailing, and what draws attention is the reduced amount of research on what the author classifies as non-price variables. Service-related research stress the positive effects of service on firm performance (Aas and Pedersen, 2011) and our investigation expands this general understanding by presenting the effect of service on positive brand sales positions in an industry where there is a tangible integration between products and services (Azimont and Araujo, 2010), in the form of convenience stores and other ancillary services (Iyer and Seetharaman, 2008). Our framework proposes brand sales positions based on two dimensions which resort to the definition of evolution or stationarity of brand sales, an important marketing response variable (Hanssens et al., 2002) located at the operational level in the marketing performance outcome chain (Katsikeas et al., 2016). ...
Article
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Purpose - Evolution and stationarity are key time series empirical concepts which need theoretical assessment by extant research. This study presents a model to explain brand sales dynamics in emerging markets using two dimensions: sales behavior in time (stationary or evolution) and final position (negative, neutral or positive). Design/methodology/approach - A three-step methodological approach was performed. First, individual brand sales series were classified (stationarity or evolution) after unit root tests. These series were then regressed against a time variable. These two steps enabled a qualitative classification of six proposed positions, ranging from the worst to the best scenario for marketing managers. A final multinomial model identified the marketing effect to these positions. Findings - Descriptive statistics reveal an insignificant prevalence of stationary sales series and a small number of positive brand sales series (ascending or promising). The multinomial model shows that price is negatively associated to positive brand sales positions, the important effect of service strategies and how product decisions can lead to an avoidance of negative positions. Research limitations/implications - The model is limited to short time series of a unique transactional dataset from a multinational energy company based in Brazil. Practical implications - The research provides a rational empirical framework to managers involved with decisions regarding brand sales dynamics in emerging markets. Originality/value - The approach advance into the development of models to uncover conditions for market evolution and stationarity in a context marked by the shortage of data.
... Coombs and Mills (2000) classified the approaches for service innovation measurement as follows: (1) assimilation approachonly technological typologies such as product and process innovation, (2) demarcation approachonly non-technological innovation typologies and (3) synthesis approacha combination of both technological and non-technological typologies. Similarly, Lin et al. (2008), Hertog et al. (2011), Aas and Pedersen (2011) and Tejada and Moreno (2013) measured service innovation based only on technological typologies such as product and process innovation. There are further differences among researchers in measuring service innovation, which are outlined as follows: ...
Article
Purpose The study aims to emphasize the need for an exclusive theory, approach and measurement scale for service innovation. In the past three decades, the importance of services and service-related industry has grown tremendously. Well-established scales used for research in manufacturing cannot be directly adopted and measured in the service industry. This article follows the synthesis approach by including both technological and non-technological typologies for measuring service innovation. This is followed by reporting the effect of service innovation on outcome performances. The context of the study is the higher education sector. Design/methodology/approach An integrated research design was used to collect data from students in various parts of south India. In total, two focus group discussions and three in-depth interviews were conducted for item generation. Confirmatory factor analysis was performed for the reliability and validity of the scale. The study developed the HEd-INNOSERV scale consisting of seven dimensions comprising 34 items. Findings The study developed the HEd-INNOSERV scale consisting of seven dimensions comprising 34 items. The empirical results demonstrate that the scale is reliable, valid and generalizable across higher education institutions (HEIs). The scope for future research is to develop a generalized scale that can measure across the entire service sector. Research limitations/implications The scale shall help researchers in testing the conceptual models earlier developed in the service innovation domain. Similarly, HEIs could measure their stakeholders' perceptions of their innovation activity. Further, the result indicates that innovation enhances the reputation of the institution, which ultimately results in positive word of mouth. Practical implications Commercialization of the scale by developing an appropriate algorithm would help institutions in measuring their innovation-led initiatives continually and establish quality and standards. The scale can be used complementarily with other measures adopted from regulatory and rating agencies. Originality/value The HEd-INNOSERV scale shall help in optimizing the existing business processes of HEIs by helping them consciously introduce appropriate technological and non-technological innovations.
... Servitization can strengthen companies' performance (Aas & Pedersen, 2011) and competitiveness, especially in the long term (Visnjic et al., 2016); however, the transition from products to services is very challenging , as it entails a shift in logic (Wikström et al., 2009). Product-oriented businesses are often characterized by standardized, homogeneous solutions and volume production, whereas more service-oriented companies are characterized by heterogeneous, specialized knowledge-intensive delivery (Fisk et al., 1993), often customized to individual customers' needs. ...
... Penemuan produk berhubungan positif dengan pertumbuhan pendapatan (De Faria dan Mendonça 2011) dan profitabilitas (Cozza et al. 2012). Aas and Pedersen (2011) tidak menemukan pengaruh inovasi produk terhadap profitabilitas dan pertumbuhan profitabilitas perusahaan. Inovasi produk merupakan sumber efektif dari keunggulan kompetitif ini Calantone et al. 2010) dampak positif dari inovasi produk terhadap pertumbuhan pendapatan. ...
... The impact of innovation on performance has been shown by several authors (Aas & Pedersen, 2011;Aboal & Garda, 2016;Feng et al., 2021;Lin, 2013;Nieves, 2016). New service development, which represented product/ process innovation in service, had been found to contribute to service firm performance (Matear et al., 2004). ...
Article
This paper proposed a comprehensive model to examine (resource-based) factors affecting management and technological innovation, and in turn the impacts of management and technological innovation on organisational performance in auditing service sector. The results confirmed the significant impacts of all proposed factors on management and technological innovation directly or indirectly. Among proposed factors, internal source involvement showed its direct impact and its mediating effect as well. The results also attested the positive impacts of management and technological innovation on audit firm performance. Contextual factors (organisational size and age) were identified to have significant influences on organisational performance. In addition, organisational age showed its moderating role on the relationship between management innovation and operational performance. The moderating effects indicated that management innovation caused higher impact on younger audit firms.
... The reasons may be the lack of shortterm financial effects (Aguilera-Caracuel & Ortiz-de-Mandojana, 2013), that the investment needed to innovate is greater than the financial benefits (de Oliveira & da or that these innovations imply maintaining the firm's leadership in the market, which at times does not entail improved financial performance (Jaskyte, 2020). On the other hand, research is also found proposing firm size or sector as contextual variables in order to analyse these relationships (Aas & Pedersen, 2011;G€ ok & Peker, 2017;Hsueh & Tu, 2004;Liao, 2018;Przychodzen & Przychodzen, 2015;Przychodzen et al., 2020;Rezende, Bansi, & Rodrigues, 2019). ...
Article
The aim of this paper is to carry out a systematic literature review about the relationships between quality management, innovation, and performance. For that end, a search was carried out in the Web of Science and Scopus databases, and 172 articles were selected. Results show that there is a positive relationship between quality management, product and process innovation (incremental and radical), and operational and financial performance, and direct and indirect relationships. Based on these results, a set of direct and indirect relationships between these variables is proposed. The study supplements the few previous investigations on these joint relationships.
... A business model (BM) defines how the enterprise creates and delivers value to customers, and then converts payments received to profits (Teece, 2010, p. 173), and BM innovation is often seen as a process that "complements the traditional subjects of process, product and organisational innovation" (Zott et al., 2011(Zott et al., , p. 1032. With the aims of increasing revenues and profit (Aas and Pedersen, 2011) and sustaining competitive advantage (Eggert et al., 2014), increasing numbers of manufacturing firms are now innovating their BMs "by adding services to [their] products" (Baines et al., 2009, p. 547), expanding their offerings from products alone to product-service systems (PSSs) (Adrodegari et al., 2015). This phenomenon is referred to as the servitisation of manufacturing and has received research attention for more than 30 years (Zhang and Banerji, 2017). ...
Article
A stream of servitization research has focused on the construction of taxonomies and typologies of product–service system business models. However, their relevance in the context of increased utilisation of digital technologies may be questioned. Thus, the purpose of this paper is to empirically revisit existing product–service system business model taxonomies to explore the following research question: how can the business models of servitized manufacturing firms be categorised in the digital era? The question is addressed through an embedded case study of five servitized firms. We found that the firms’ business models varied with regard to the degree of the suppliers’ ownership of delivered products, degree of smartness of the services provided and degree of performance orientation of contracts. Based on these findings, we derived a new product–service system business model taxonomy with eight categories, presented in a 2 ×2 × 2 matrix, that significantly extends earlier taxonomies.
... In the last decades, innovation has been considered important not only for maintaining competitiveness in the most demanding markets, but also for the search in differentiation in this competitive market (Aas and Pedersen, 2011;Fagerberg et al., 2005;Yang et al., 2014). Innovation is a 'fuel' for organisations that are (stagnant or even declining) enabling opportunities for change and business resumption (Damanpour and Gopalakrishnan, 1998). ...
... As a result, organizations with improved human capital can increase their capability to grip the multifaceted processes that complement change (Kimberly & Evanisko, 1981;Young et al., 2001) and generate new understanding (Nieves, 2015). Supporting this Aas and Pedersen (2011) argued that firms concentrating on service innovation have considerably greater productivity (sale proceeds per worker) development than businesses not concentrating on service innovation. ...
Article
Full-text available
This study intends to examine whether hotels' human capital innovation initiatives are an important predictor of service innovation performance. For meeting the objectives of the study, the data was collected using a questionnaire from 245 staff members working in an A category hotel's in Jammu and Kashmir using a non-probability convenience sampling technique. Structured equation modeling was used to test the hypothesis. Results revealed a positive impact of human capital innovation on service innovation. Further, the study found a significant impact of service innovation on employee performance and competitive advantage. The results enriched the knowledge regarding human capital innovation by revealing its influence on the hotel industry's service innovation performance in the form of competitive advantage. The study also leads to a number of future research directions for researchers as well as academicians.
... As a result, organizations with improved human capital can increase their capability to grip the multifaceted processes that complement change (Kimberly & Evanisko, 1981;Young et al., 2001) and generate new understanding (Nieves, 2015). Supporting this Aas and Pedersen (2011) argued that firms concentrating on service innovation have considerably greater productivity (sale proceeds per worker) development than businesses not concentrating on service innovation. ...
Research
Full-text available
This study intends to examine whether hotels' human capital innovation initiatives are an important predictor of service innovation performance. For meeting the objectives of the study, the data was collected using a questionnaire from 245 staff members working in an A category hotel's in Jammu and Kashmir using a non-probability convenience sampling technique. Structured equation modeling was used to test the hypothesis. Results revealed a positive impact of human capital innovation on service innovation. Further, the study found a significant impact of service innovation on employee performance and competitive advantage. The results enriched the knowledge regarding human capital innovation by revealing its influence on the hotel industry's service innovation performance in the form of competitive advantage. The study also leads to a number of future research directions for researchers as well as academicians.
... Innovation differentiates performance of companies (Aas and Pedersen, 2011;Fagerberg et al., 2005;Yang et al., 2014) and organizations, bringing competitive advantages and increasing loyalty of customers (Reinartz and Ulaga, 2008). ...
Article
Purpose The purpose of this paper is to characterize the trends for educational innovation in higher education in Brazil, constructing a conceptual model of innovation trends in the sector. Design/methodology/approach A preliminary profile online was done with 76 experts in university education, and 17 were contacted for in-depth perceptions. The analysis of the content was made of all material and, as a result, the critical analysis of the results, which culminated in the development of a conceptual model and characterization of trends, dimensions and sub-dimensions to innovation in higher education. Findings The dimension universal design of accessibility and learning had major considerations, contributing to implementation of new innovative practices for higher education. Some sub-dimensions emerged, namely governance, risk management, curricular extension and affirmative policies. Research limitations/implications The difficulty in performing the deepening of all dimensions involved in terms of plurality of specialties involved. Practical implications The use of the model and characterization of trends could serve as tools to support the strategic planning of Higher Education Institutions (HEI), and the trends allow planning innovation practices, favoring improvements of HEI, students, employees and community to learning organization. Social implications This paper identifies trends for higher education, highlighting innovation indicators or successful practices, and characterizes the dimensions and sub-dimensions trends; it also makes an undeniable contribution to measure the educational innovation in higher education. Originality/value This paper encourages researchers, in partnership with institutions, to develop scientific projects with other institutions and researchers, to meet interests not only of HEI as a whole, but also of countries that prioritize education with quality, to reach the real educational objectives.
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In this paper the authors examine the types of innovation in service at small and medium textile sales enterprises at Valledupar Colombia. The research uses a descriptive, no experimental and transactional methodology. We use a Likert type questionnaire to acquire the data. We interview a population of fifteen managers of small and medium sales business. We found that the implementation of new service concepts is present with high frequencies. The enterprise innovates with the implementations of additional services. The studied enterprises have the physical infrastructure and the marketing (such as, price, distribution and communication with the client) are in medium level of presence. In these societies the new interfaces with the costumer are in low participation level. There are no innovations in the production processes. The paper focus on empirical evidence of the innovation’s characteristics in small businesses. http://www.europeanjournalofscientificresearch.com/issues/EJSR_144_4.html
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Purpose Servitization has been recognized as an effective means for manufacturers to achieve superior performance. However, the servitization-performance relationship is controversial since prior empirical studies have provided inconsistent and even contradictory results. Hence, the purpose of this paper is to provide a quantitative review on the servitization-performance relationship based on research findings reported in the extant literature. Design/methodology/approach Studies from 41 peer-reviewed journal articles were sampled and analyzed. A meta-analytic approach was adopted to conduct a quantitative review on the relationship between servitization and firm performance. Findings The results confirm a positive servitization-performance relationship. In addition, the results reveal that the observed servitization-performance relationship is influenced by the operationalization of constructs (servitization and performance) and control variables (industry and region). Originality/value As the first meta-analysis on the servitization-performance relationship, this study contributes to the servitization literature and provides future research directions.
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Based on dynamic capability and contingency theory, authors examined the direct connection between Service innovation, Marketing innovation and Customer satisfaction, and the interacting mechanism of competitive intensity. The research model and hypotheses were developed from extant studies. Respondents from 300 microfinance banks participated in the survey. Analyses in Smart PLS software showed that Service innovation positively and significantly affects Customer satisfaction. Marketing innovation promotes customer satisfaction. Furthermore, the influence of Service and Marketing innovation on Customer satisfaction is greater in a competitive environment. Therefore, microfinance bank managers must continue to invest in innovation-related capabilities (service and marketing) to keep their customers satisfied. Theoretical and managerial contributions are highlighted in the study. JEL Classification: M10, M31
Article
Purpose The purpose of this paper is to test how national culture may help to explain cross-country differences in new service development (NSD) by comparing the impact of NSD success factors between Mexico and Sweden. Design/methodology/approach Eight hypotheses based on prior literature on NSD and national culture were tested using covariance-based structural equation modeling and survey data from 210 Mexican and 173 Swedish firms. Findings Launch proficiency and customer interaction had a positive impact on NSD performance with no difference between the two cultures. NSD process formalization did not have clear positive impact on NSD performance but had a statistically significantly stronger impact in the structured culture (Mexico). Team empowerment affected NSD performance positively, but the difference between cultures was non-significant. Research limitations/implications The impact of national culture depends on the type of NSD success factor. Some factors are unaffected by the cultural context, while factors congruent with the national culture enhance performance. Factors incongruent with national culture may even hurt NSD performance. Practical implications When choosing priorities in NSD improvement, managers need to consider the national culture environment. Originality/value Paper directly tests how national culture moderates NSD performance using primary data. Findings suggest that the effects of NSD success factors are contingent on congruence with national culture.
Chapter
This study explores whether machinery firms with a ‘hidden champions’ profile leverage Industry 4.0 practices to roll out smart services; whether this allows them to get a firm grip on their installed base; and whether it allows them to expand their international (service) business. The research is conducted based on exploratory, multiple-case study methods. The author finds that the implementation of smart services can improve a machine tool builder’s hold on its installed base and expand the scope of its international (service) business. However, the study also finds that the ability to capitalise on this potential depends on a series of moderating variables. The study also concludes that there is a risk that smart services do not unlock a strong willingness-to-pay among potential customers. It, therefore, calls into question several conventional wisdoms, such as the possibilities that Industry 4.0 offers for suppliers operating in business-to-business markets, and the receptiveness to smart services by buyers in such markets. Finally, it highlights the specific liabilities faced by hidden champions with regard to expanding their smart services business. The chapter provides practical insights into the hurdles that industrial suppliers must overcome in their attempts to achieve uptake of smart services by customers, particularly within a cross-border context.
Article
Purpose The purpose of this paper is to analyze the available literature on the relationship between servitization strategy and firm performance, which identifies the main streams and theoretical foundations of research and provides guidelines for future research in this area. Design/methodology/approach The paper discusses the relationship between servitization strategy and manufacturing firm performance by gathering and analyzing existing research published between 1988 and 2019 through bibliometric analysis and content analysis, and then unpacking the processes and impacts servitization has on firm performance. Findings This paper analyzes the evolution of the concept and servitization strategy of manufacturing organizations, and the relationship between servitization strategy and manufacturing company performance. Then, the authors establish an integrated theoretical framework aimed at conveying the factors and providing a practical reference. Practical implications The paper establishes an integrated theoretical framework on servitization and firm performance. The results of the systematic analysis of the literature can be used to inform managers about implementing servitization. Managers need to measure the benefits of servitization from two aspects: financial performance and non-financial performance. And managers need to consider some internal and external influencing factors to achieve a strategic–environmental–organizational fit that will bring better benefits to the firm. Originality/value The paper contributes to the existing research in three different ways. First, the study perfects the gap of research on the range of all of the factors within the relationship between servitization strategy and manufacturing company performance. Second, the study demonstrates a clear indication of how existing studies’ differences influence the research outcomes. Third, this paper proposes research problems and future research directions.
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Research on public sector innovation has gained momentum recently as electronic government performance has been met with criticism. The ambiguity comes from the lack of deep understanding of the intervening variables through which service innovation affects e-government performance. Therefore, this article presents a conceptual framework to better understand the impact of service innovation on e-government performance. The role of stakeholder involvement and stakeholder perceived value of innovation in the relationship between service innovation and e-government performance is examined. The data came from a survey of 120 Iranian government organizations. Reliability and validity of the measurement instrument were confirmed and statistical analysis was performed to test the framework. The results confirm the moderating effect of stakeholder involvement and the mediating role of stakeholder perceived value of innovation. It was also revealed that citizens are not actively engaged in the innovation process and their perceived value of innovative e-government services remains low.
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Six competing models of quality management and financial performance improvement are hypothesized and statistically tested, using data from a survey of general managers of 288 four- and five-star hotels in Egypt and structural equation modeling. The comparative analysis of the conceptually and structurally different models suggests that financial performance can be improved when quality management is viewed holistically as a commonality of its interconnected practices (top management leadership; employee management; customer focus; supplier management; process management; quality data and reporting). Managers must therefore integrate stakeholders into design and implementation of effective quality management systems. This study: advances knowledge of the roles of alternative models of quality management in improving financial performance; deepens our understanding of the main features of a quality management system capable of enhancing organizational performance; and contributes to ongoing debates in quality and service management literature on factors that impact financial performance. PLEASE SEE THE PUBLISHED FULL PAPER ON THE JURNAL WEBISTE https://doi.org/10.1080/02642069.2019.1601706
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Servitization refers to the phenomenon in which manufacturers increasingly focus on services in tandem with the sale of their products. Despite the growing scholarly awareness of servitization, systematic reviews are lacking to clarify how its value can be created through different relevant factors. Based on a conceptual framework, this study fills the gap by examining 213 empirical research papers published between 2005 and 2019. Descriptive and thematic analyses on servitization are presented for its definitions, prerequisites, performances, and intermediate factors of the value creation in servitization. Findings and research streams are synthesised in a causal graph and a mechanism matrix to offer suggestions and research directions for future practitioners and researchers. The results have specified key factors from different levels, such as firm attributes, operations, networking, and the environment, each of which functions in the link of the formation and value creation of servitization. The results further revealed that the existing literature has emphasised the absolute benefits of servitization and predominantly investigated intermediate factors of its value creation. This study offers literature-based insights to enrich the theory-building of servitization and to develop insightful instruments for practitioners.
Article
Purpose The purpose of this paper is to establish the link between three constructs, namely, service innovation, corporate reputation (CR), and word-of-mouth (hereinafter WOM). Primarily, the aim is to understand whether innovation in a service firm drives its reputation, thereby resulting in positive WOM where the direct effect of service innovation of a firm on WOM is mediated by reputation. Furthermore, the study also seeks to understand whether the type of service firm has an effect on determining the level of the mediation effect. Design/methodology/approach This study adopts an integrated approach where the measure for the construct service innovation is explored through a qualitative approach, and the conceptual model is estimated through path analysis. The service industry taken for this study is banking, and the through non-probability criterion sampling technique, 252 customers responded to their level of agreement. The PLS-SEM technique was used to estimate the path coefficient by following the two-stage approach. The multigroup moderation analysis is performed to determine whether the type of the bank plays a major role in determining the direct effects and the mediation effect of CR between service innovation and WOM. Findings The result of this study indicates that there is a strong positive association between the three constructs. Further, the direct relationship between service innovation and WOM is partially mediated by reputation. The result of the multigroup moderation indicates that the type of the bank plays a major role in determining the mediation effect of reputation. Practical implications The study helps the decision makers and the managers of the bank to understand that frequent innovation within the firm would help to gain reputation, and thereby customers would tend to give a positive WOM. Further, non-reputable firms can still gain a positive WOM if they continuously innovate new services. In the Indian context, it is noted that there is a difference between private and public banks in determining the mediation effect of reputation between service innovation and WOM. Originality/value The originality of the study is based on the following: development of a unique scale to measure service innovation in the banking industry overcoming the existing scales which are based on goods-dominant logic; estimating empirically the combined effect of service innovation and CR on WOM; the process of evaluating the moderated mediation effect; how the mediating effect of CR varies from private sector banks to public sector banks.
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Bu çalışmanın amacı A grubu seyahat acentası çalışanlarında öğrenme odaklılık ve yeni hizmet geli-şimi ile finansal performans arasındaki ilişkiyi görgül olarak incelemektir. Çalışmada öğrenme odaklılık kavramı öğrenmeye bağlılık, paylaşılan vizyon, açık fikirlilik ve örgüt içi bilgi paylaşımı boyutlarında ele alınmıştır. Veriler 5-22 Eylül 2015 tarihleri arasında Marmaris'te faaliyet gösteren acenta çalışanların-dan toplanmıştır. Kolayda örnekleme yoluyla çalışanlardan elde edilen 389 verinin analizinde doğrula-yıcı faktör analizi ve regresyon analizi kullanılmıştır. Analiz sonuçları öğrenme odaklılık boyutları ile yeni hizmet gelişimi ve finansal performans arasında anlamlı ilişkiler olduğunu göstermektedir. Elde edilen bulgular ışığında seyahat acenta yöneticilerine çeşitli önerilerde bulunulmuştur. Abstract: The aim of this study is to do an empirical research on the relationship between learning orientation and new service development of travel agency employees and their financial performance. In the study, the concept of learning-orientation is dealt with in terms of commitment to learning, shared vision, open-mindedness and intra-organizational knowledge sharing. The data were collected from travel agents workers in Marmaris between 5-22 September 2015. Confirmatory factor analysis and regression analysis were used in the analysis of 389 data obtained by convenience sampling. Analysis results show that there are significant relationships between learning orientation dimensions and new service development and financial performance. Various suggestions were made to travel agency managers in the light of the findings obtained.
Purpose: The link between corporate social responsibility (CSR) and corporate firm performance (CFP) has been extensively studied, but a significant research gap remains when considering potential mediating factors that can provide a more comprehensive and complete picture of the CSR-CFP link. Among the possible mediators, innovation is one of the most noteworthy factors, but previous studies have found inconsistent results between CSR and innovation in the service industry context. Existing studies have reported an insignificant or negative relationship between CSR and innovation in the service industry, including the hospitality industry. To clarify this controversy, this study aims to propose the positive mediating role of innovation to explain the CSR-CFP link in the hotel and casino industry. Design/methodology/approach: To discover the relationship among CSR, innovation and CFP, a panel data analysis, the two-way fixed-effects model, is used with robust standard errors. Particularly, to examine the mediating role of innovation, this study conducts Sobel, Aroian and Goodman tests. The sample period is from 2000 to 2017, consisting of 342 firm-year observations. Findings: With a sample of publicly traded US hotel and casino firms, this study confirms the mediating role of innovation and suggests a strategic direction of CSR, highlighting the importance of innovation in the hospitality industry. Practical implications: This study presents an important piece of evidence regarding non-technological innovation and proposes a strategic direction of CSR in the hotel and casino industry to achieve competitive advantages. Originality/value: Adopting a new measurement method of innovation using data envelopment analysis, this study serves as a reference for a better understanding of a role of innovation in the CSR-CFP link for hospitality scholars.
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The traditional goods-dominant view of marketing focuses on products as the focus of marketing activities. However, as we evolve to a new service-centric dominant logic for marketing, the focus needs to shift from products to customer solutions, which are integrated combinations of products and services that solve complete customer problems. In the marketing of solutions, customer outcomes are the starting point for marketing activities and products are seen as platforms for delivering service-centric solutions. This chapter provides a comprehensive roadmap for defining, designing and delivering customer solutions, and offers suggestions for academic research to advance our understanding of solutions.
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This article empirically explores the relationship between innovation and economic performance in services at the firm level. The empirical analysis is based on a unique longitudinal firm-level data set, which matches the Italian Community Innovation Survey (CIS II) data (1993-1995) and a set of economic indicators provided by the Italian System of Enterprise Account (1993-1998). In particular the empirical analysis aims at assessing whether the presence of innovation and the amount of resources devoted to innovation are able to explain the economic performance of firms in the service sector. The results presented show that innovating firms out perform non-innovating firms in terms of productivity levels and economic growth. Productivity is also found to be linked to the amount of innovation expenditures, especially those devoted to the acquisition and internal development of new software.
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This article explores the nature of inter-functional integration in the new service development process through a detailed study of two new internal ICT services developed at one of Europe's largest service providers: Consignia, the UK postal service. The study develops a conceptual framework, incorporating dimensions of process, context and outcomes, to inform the analysis. The empirical findings reveal that the level and timing of appropriate functional stakeholders, influence of relationships with external stakeholders, formalisation and ownership of authority, shared understanding of goals and the influence of shifting organisational contexts act as critical factors underlying the nature of inter-functional activities and outcomes. Managerial implications and future research directions are drawn.
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Delivering modern and responsive public services requires informed innovation drawing on a combination of design, planning and evaluative skills. The development of the national 24-hour telephone helpline service NHS Direct provides a case study demonstrating how, through using these skills, OR has been instrumental in achieving public service innovation. Firstly, OR analysts led strategic design and scenario-planning work, assessing the evidence on the performance of ‘direct’ services here and around the world and developing scenarios of an NHS where much greater use was made of modern communication technology, such as telephone call centres, to provide services. Secondly, we did modelling work to help determine the size, distribution and staffing of the call centres required in England to meet the likely demand and satisfy service performance targets. Thirdly, we set out evaluation criteria and developed performance-monitoring systems. NHS Direct has been one of the best-received innovations in the history of the NHS and Operational Research has made a crucial contribution to its development.Journal of the Operational Research Society (2003) 54, 1022–1028. doi:10.1057/palgrave.jors.2601617
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Reports on research concerning the role and nature of communication during the innovation process of new financial services. A causal framework has been developed on the antecedent role of communication in financial service innovation and its impact on success. Project team communication is conceptualized by: intra-project communication (communication between project team members); and extra-project communication (boundary-spanning communication). Examines the effectiveness of these communication flows from an information processing perspective and assesses the amount of uncertainty reduced about customers, competitors, technologies and resources. Also assesses the impact of the reduction of uncertainty on new financial service performance. In view of the context, i.e. financial service innovations, we included the specific characteristics of services (intangibility, inseparability of production and consumption, heterogeneity and perishability) into our theory and research design. Finally, the theoretical and managerial implications are discussed.
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Purpose – To analyse the mass customisation strategies (MC) developed by mobile phone operators and to identify the types of customer value perceived by mobile phone users that customise services to their profiles. Design/methodology/approach – A customer-centre approach was adopted for analyzing MC strategies that enhance both extrinsic and intrinsic customer value. A convenience sample was surveyed for gathering data regarding the customer value dimensions perceived by users of customised mobile phone services in Greece. Findings – Findings revealed that MC strategies that are customer centred are vital as, users of customised mobile phone services perceive both “give” and “get” customer value dimensions. As MC does not come for free, to persuade customers to get involved and invest time and effort in value chain operations for designing customised services, companies need to identify and provide enhanced customer values. Research limitations/implications – Research findings have great implications in the new service development processes and marketing – communication strategies of mass customisers. Due to the small sample size, future research should test the wider and global generalisability of findings. Practical implications – Findings help practitioners increase the adoption and use of mass customised mobile phone services by providing insight on how to: develop MC strategies from a customer-centric perspective; and conduct a customer value-based market segmentation for enhancing marketing effectiveness and MC customer adoption. Originality/value – The MC literature is dominated by operation-supplier approaches to MC strategies in the manufacturing sector. In services, customer involvement in value chain operations is also significant. The study contributes by suggesting a customer-centric approach for developing MC in services that enhances customer value. The study also extends and adapts a multi-dimensional construct for measuring customer value in customisable mobile phone services environments.
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Purpose – This study attempts to probe within a multi-dimensional perspective the nature and type of daily innovation practices of small- and medium-sized enterprises (SMEs) located in Taiwan. The relationship between innovation and organizational performance will also be explored. Design/methodology/approach – Data of interest were collected through a telephone survey. From the 2000 Directory of Manufacturing and Service Industries in Northern Part of Taiwan, companies with a total employee number less than 200 (the definition of an SME in Taiwan) were the population. Telephone calls to 877 firms were successfully completed with a response rate of 87 per cent. Findings – Eighty per cent of the surveyed companies conducted some sort of innovation, the two major types of innovations were technological and marketing innovations. Innovation has a weak link with company sales. Administrative innovations have surfaced to be the most crucial factor in explaining sales rather than technological innovations. Practical implications – Creating a successful innovation platform to serve as a base for non-technology-related innovations may prove to be the most critical catalyst to capitalize on innovation efforts. The research results also provide some insights for companies that are not sure how to integrate innovation into their business operations. Originality/value – This study unveils the innovation practices of this novel economy and particularly focuses on the less explored SMEs in an Asian context.
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Mobile service innovations are crucial for the long-term success of companies operating in turbulent and uncertain environments. These innovations need to be introduced at a rapid pace while at the same time companies have to absorb market information during the new mobile service development. Hence, the purpose of this paper is to construct a conceptual framework on the critical antecedents of project learning and time-to-market during new mobile service development. An extensive case study research involving four innovation projects was performed in a leading Dutch telecommunications company. With respect to project learning, our research findings indicate the crucial influence of a flexible decision architecture, project team memory, a high information awareness and a good fit between information requirements and capabilities. Both innovative and coordinative communication are required throughout the service innovation process. With regard to time-to-market, our research results point to the essential impact of project complexity, top management support, information power of suppliers and technological synergy. Finally, a medium level of project learning is the ideal condition for a fast time-to-market during mobile service innovation.
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This paper investigates how three marketing-related sources of advantage – market orientation, new service development and brand investment – contribute to service firm performance by operationalising the sources-position-performance framework in a multi-sector sample of service organisations. New service development and brand investment are found to contribute to the attainment of positional advantage and thence to performance. Market orientation, when considered in combination with these other sources, does not contribute directly to positional advantage and performance. Cost, brand and new service success positions are found to contribute to service firm performance.
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Purpose – When compared with the field of new product development, research on new services has seen fewer developments and offers less comprehensive insights. This paper tries to fill this gap by providing empirical findings from two qualitative longitudinal case studies of new service development. Knowledge on the management issues for developing new bank offerings efficiently is limited. Furthermore, recent research suggests that organisational learning can contribute greatly to the success of innovation projects. The aims of this paper are to provide a detailed description of the development process of a new financial product and to identify learning actions that may contribute to its effectiveness. Design/methodology/approach – The paper reports findings from a qualitative, longitudinal case study of a well-known French bank, and of a retailer. The research focuses on the description of the process, the organisational issues involved and the decision making during the development process. Findings – The findings lead to the proposition of a model of new service development comprising a strong organisational learning component. Research and managerial implications are discussed for ways to better understand the new service development process and to enhance its effectiveness. The results reveal an informal development process consisting of a sequence of issues to solve and decisions to make. Multiple learning actions and strategies are identified that enhance the process's effectiveness and efficiency. Research limitations/implications – Generalisation of the proposed NSD model will require further qualitative and quantitative investigations. For the qualitative part, observations of the development of standardised offers are necessary to enrich the initial framework. Furthermore, non-standardised offers would constitute a specific research field, given the dimensions of complexity and divergence of the delivery processes. For the quantitative part, the impact of learning process on results of the development may be assessed on the basis of measurements used in similar contexts, such as the impact of learning on the success of joint ventures. Originality/value – Findings suggest that learning during innovation should be supported for banks and retailers. Several opportunities for further research are therefore suggested.
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What factors lead to success in the development of new businesses services? By synthesising the literature on new goods development and services marketing, the results of a major empirical investigation of new service development in the business-to-business services sector are reported. A set of factors that describe new service projects is identified and which factors are responsible for accomplishing different forms of success are shown. Further, the findings speak to managers about how the features that distinguish services from physical goods impact on the successful development of new services. Developing new services that provide clients improved functional and experiential quality, that are innovative and truly superior to competitive offerings, and that benefit from a proficient new service development process, as well as from the unique strengths of the firm are key requirements for creating and marketing winning new services.
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Service companies in high tech sectors frequently implement decentralized decision architectures in their innovation processes to improve responsiveness under extremely dynamic and uncertain business conditions. As a corollary to the empowerment of decision makers at the product management level, the success of new service development projects depends increasingly on individual managers’ information processing and decision-making performance. This article investigates antecedents of decision-making effectiveness in high tech NSD projects, and report on a case study performed in the mobile telecommunication services industry. NSD managers’ unique task conditions are articulated, and antecedents and moderators of effective decision making are identified in a study of four innovation projects. A theoretical framework integrates the findings. The study reveals the crucial role of decision makers’ flexible use of various cognitive strategies, their proactive attitude, and their capability to mentally represent various interfaces between service, customer, technology and firm. Managerial implications and suggestions for further research are provided.
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The purpose of this study is to provide the knowledge to understand and the skills to manage innovation at the operational and strategic levels. It integrates the management of market, technological and organizational change to improve the competitiveness of firms and effectiveness of other organizations. The analysis suggests that it is no longer sufficient to focus on a single dimension of innovation, as technological, market, and organizational change interact. Instead of following the ‘one best way' school of management, this study identifies the links between the structures and processes that support innovation. One way of developing technologies, products, and processes by firms involves venturing outside their existing core competencies. Firms establish internal corporate ventures (ICVs) in order to exploit underutilized resources in new ways; to introduce competitive pressure on to internal suppliers; to divest non-core activities; to satisfy managers' ambitions; to spread the risk and cost of producst development; to combat cyclical demands of mainstream activities; and to diversify the business. However, firms may also establish ICVs in order to grow new businesses based on new technologies, products, or markets. A new corporate venture requires a clear business plan and an intrapreneur who must raise the finance, as well as manage the development and the growth of the businees. Such an intrapreneur should resemble a traditional entrepreneur in a high level of motivation and need for autonomy. However, unlike their counterparts, intrapreneurs also need to have good political and social skills in order to deal with internal politics and bureaucracy. Firms that are consistently successful at corporate venturing are characterized by four factors: (1) in assessing failed ventures, they draw a distinction between bad decisions and bad luck; (2) they measure progress of ventures against agreed milestones, and change the direction if necessary; (3) if a venture is not successful, they terminate it, rather than making further investments; and (4) they perceive venturing as a learning process, and learn from both failures and successes. The present study examines the nature of innovative small firms and the issues particular to their creation, management, and growth. Focuses on a subset of small and medium-sized enterprises (SMEs) which are based on new technologies, and differ from other SMEs because they are usually established by highly qualified personnel, require large amounts of capital, and face greater technical and market risk. While new independent ventures and corporate ventures have similar requirements concerning management and organization, certain differences exist. While corporate entrepreneurs have the advantage of the financial, technical, and marketing resources of the parent firm, they must seek high levels of affiliation and need great social skills in order to deal with internal politics and bureaucracy. Their independent counterparts, on the other hand, must raise finance and develop functional expertise, but have the advantage of independence and managerial and technical autonomy. (AT)
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Service-dominant logic (S-D logic) is contrasted with goods-dominant (G-D) logic to provide a framework for thinking more clearly about the concept of service and its role in exchange and competition. Then, relying upon the nine foundational premises of S-D logic [Vargo, Stephen L. and Robert F. Lusch (2004). “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, 68 (January) 1–17; Lusch, Robert F. and Stephen L. Vargo (2006), “Service-Dominant Logic as a Foundation for Building a General Theory,” in The Service-Dominant Logic of Marketing: Dialog, Debate and Directions. Robert F. Lusch and Stephen L. Vargo (eds.), Armonk, NY: M.E. Sharpe, 406–420] nine derivative propositions are developed that inform marketers on how to compete through service.
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While many writers and strategists maintain that innovation is important, research has often demonstrated that product innovativeness does not have a major impact on the rate of success in the marketplace. Elko Kleinschmidt and Robert Cooper demonstrate that the relationship between product innovativeness and commercial success is U-shaped. That means that both high and low innovativeness products are more likely to be more successful than those in-between. The authors suggest that past research has not allowed for this non-linear relationship and that their data show that moderately innovative, middle-of-the-road products are less likely to succeed when measured by a number of performance criteria. They explore a number of implications of these results.
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The authors investigate the effectiveness of service transition strategies for generating shareholder value by evaluating secondary data pertaining to 477 publicly traded manufacturing firms during 1990-2005. The impact of a firm's transition to services on firm value (as measured by Tobin's q) remains relatively flat or slightly negative until the firm reaches a critical mass of service sales (20%-30%), after which point they have an increasingly positive effect. Furthermore, the effect of service sales on firm value depends on both firm and industry factors. Service transition strategies are more effective at enhancing value when the service offerings are related more to the firm's core business and when firms have more available resources (i.e., resource slack). The impact of adding services to core products on firm value amplifies as industry turbulence increases but diminishes when the firm's core products are in high-growth industries.
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This study extends the prior research (Zahra and Das 1993) by examining the association between a company’s innovation strategy and its non-financial performance in the upstream and downstream strategic business units (SBUs) of oil and gas companies. The sequential model suggests a causal sequence among six dimensions of innovation strategy (leadership orientation, process innovation, product/service innovation, external innovation source, internal innovation source, and investment) that may lead to higher company non-financial performance (productivity and operational reliability). The study distributed a questionnaire (by mail, e-mailed web system, and focus group discussion) to three levels of managers (top, middle, and first-line) of 49 oil and gas companies with 140 SBUs in Indonesia. These qualified samples fell into 47 upstream (supply-chain) companies with 132 SBUs, and 2 downstream (demand-chain) companies with 8 SBUs. A total of 1,332 individual usable questionnaires were returned thus qualified for analysis, representing an effective response rate of 50.19 percent. The researcher conducts structural equation modeling (SEM) and hierarchical multiple regression analysis to assess the goodness-of-fit between the research models and the sample data and to test whether innovation strategy mediates the impact of leadership orientation on company non-financial performance. SEM reveals that the models have met goodness-of-fit criteria, thus the interpretation of the sequential models fits with the data. The results of SEM and hierarchical multiple regression: (1) support the importance of innovation strategy as a determinant of company non-financial performance, (2) suggest that the sequential model is appropriate for examining the relationships between six dimensions of innovation strategy and company non-financial performance, and (3) show that the sequential model provides additional insights into the indirect contribution of the individual dimensions of innovation strategy (partially mediators) to company non-financial performance —productivity or operational reliability. The findings provide empirical evidence extending the previous model of Zahra and Das. These findings also provide a basis for useful recommendations to upstream and downstream SBU managers attempting to implement a sequential model of innovation strategy —company non-financial performance links. This study shows that upstream SBUs rely on external innovation sources. They will acquire innovation policies through business partnership development (such as Joint Operation Body for Enhanced Oil Recovery or JOB-EOR, Joint Operation Body for Production Sharing Contract or JOB-PSC); licensing agreements (Technical Assistance Contract or TAC, Consortium Cooperation System); or acquisition with other firms (Joint Operating Contract or JOC). In contrast, downstream SBUs emphasize on generating internal innovation sources to develop their own in-house R&D efforts. The downstream SBUs should make extensive policies of internal innovation sources in their attempts to control the distribution of oil-based fuel and transmission of natural gas for domestic and international markets effectively. Both policies would enhance understanding and ultimately contribute to the improvement of company financial performance —sales, net profit margin, return on assets.
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The authors provide a systematic framework for thinking through the opportunities and risks inherent in a strategy that seeks services-led growth. Drawing on the concept of customer-activity chains, they explain four paths that companies can follow to create new value for their customers. Prominent examples include Kodak, General Motors, UPS and Nike.
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Innovation processes in services remain under-researched, but recently large-scale surveys have been conducted which allow for a more systematic appraisal of the level and scope of innovation in services. To date, much of the literature on innovation in services focuses on the adoption and use of information and communication technologies (ICTs). Innovation in services, and services innovation, should, however, be understood in broader terms, and this understanding should extend to non-technological innovation. This paper presents evidence from a recent large-scale survey of innovation amongst German commercial service firms. It shows that services are much more active with respect to innovation than is widely thought. They are innovative in terms of being producers of service and process innovations. From our broader perspective, we examine the pattern of innovation as it relates to the standardisation-particularisation of service products, across a range of service sectors and across firms of various sizes. The production of bespoke or customised services shaped by client inputs has long been considered a defining characteristic of many services, and one that has affected their innovation potential. The present analysis reveals a pattern of diversity in behaviour, which reflects the diversity amongst service firms, and demonstrates the need for more subtle and differentiated analyses of services and services innovation.
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The role of a metaphor of centrally controlled air conditioning in governing Singaporean transport planning is examined, and its consequences evaluated. A modern transportation system has been put in place to link a hierarchy of central places. Tight government control has made change possible. A reliance on technical expertise at the expense of public involvement has, however, failed to develop public transport to effectively serve a range of dispersed‐destination travel needs. Regulatory approaches, furthermore, have discouraged service innovation. Policies making car purchase expensive have restricted car ownership. Effective change would be facilitated by involving a highly educated public more in decision‐making.
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The service sector is important in the economy of most advanced countries. Focusing on service innovation, this study examines customer service activities in the automobile industry from 2001 to 2003, and identifies the most representative and innovative services of motor firms. These service innovations are not recommended under traditional discounted cash flow (DCF) assessment. However, a positive options-based net present value (NPV) motivates companies to innovate their service activities and thereby increase the number of products they sell. Evidence shows that an options-based evaluation is more suitable than traditional approaches. The results of this study should help managers to address and evaluate service innovations.
Article
Purpose – The purpose of this study is to investigate the different types of innovation that are predominant in companies in the UK services sector, the degree of innovativeness, the practices associated with the pursuit of innovation and their relationship with company performance. Design/methodology/approach – The empirical phase of the study was conducted using a two-stage process initiated by interviews and completed with mail surveys. Interviews were held with six senior executives of leading service companies in the UK. 214 senior managers of UK service companies were surveyed. The response rate was 47 per cent. Relevant statistical analytical techniques including regressions were used to analyse the data. Findings – Product innovations are emphasized more in telecommunications and financial sectors than in transport and retail sectors while service innovations are emphasized more in retail and transport sectors. Radical and incremental innovations were found to be related to innovation performance. Radical innovations were also found to be related to innovation management practices. Practical implications – Service companies need to pursue radical, me-too and incremental innovations. Formal practices and processes must not be limited to the pursuit of radical innovations. Service companies must also recognize the pursuit of incremental innovations formally in their innovation strategies and define formal process for implementing these types of innovation. Originality/value – The finding that formal practices are set up to foster the development of radical innovations in spite of the fact that both me-too and incremental innovations are also related to innovation performance represents an interesting contribution. Applying a framework that was based on the development of new products and innovations in the manufacturing context to the service context represents a contribution to the extant literature. Finally, investigating the link between innovation types, innovativeness, management practices and innovation performance in service companies is pioneering.
Article
This essay reviews the European literature on innovation by drawing upon specially commissioned reports written by academics located in six countries. The innovation literature is classified into four types: technologist, service-orientated, integrative and theoretical. Each of these types is explored. One of the major findings is that different countries and researchers are at different stages of this life cycle approach to the literature. It is also suggested that the integrative approach is an exciting opportunity for developing the research agenda in this field.
Article
This article explores a phenomenon termed here as ‘encapsulation’. Part of this process is the trend in secondary (manufacturing) and primary (agricultural and resource-based) companies towards providing service products that are related to the goods they produce. The study attempts a more distinctive approach of considering the innovation process within services by considering the issue of service consumption, both in combination with manufactured goods and separately on their own (associated with the issue of utility in consumption process). It also analyses the life span of consumption and use are considered; with analysis moving away from the perspective of a single act of consumption towards the ongoing use and utility of the service (or good with it) being consumed.
Article
Purpose – The paper examines a financial service innovation process, which is referred to as financial product innovation: improvements to existing services. This study conducts a critical analysis of the operational process of opening a Lloyds TSB Student Account at a local branch. Design/methodology/approach – The process of opening a student bank account is documented in a flowchart/flow network, which highlights operational steps and the visibility line between front-end and backroom staff. This process mapping technique/flowchart allows for the diagnosis and identification of both potential and actual bottlenecks in the existing process, which prevented a quality service encounter for the customer. After outlining these problematic areas/non-value added activities, the adopted qualitative triangulated methodological approach yields a redesigned flowchart illustrating these changes. Furthermore, this paper proposes a re-engineered process (i.e. e-process or virtual process), which removes these bottlenecks systematically. Findings – The results show the increased efficiency, productivity and customer satisfaction levels that are the key to innovation process performance. The study concludes with evidence of non-financial performance results of this type of financial service innovation. Research limitations/implications – The study does not quantify the performance of e-process operations, and it does not examine customer concerns related to complexity, trust security and safety issues. However, it provides useful managerial recommendations for improving the process of opening a student account. Numerous key learning points and invaluable insights gathered during this project are practical contributions both to managers involved in innovation process and researchers interested in this domain. Practical implications – This paper provides a re-engineered process which is simpler, more economical and faster than the original process. It presents principles to diagnose appropriate service operation processes for re-engineering using action mapping programmes and review their innovation performances. Managers will learn new frameworks, diagnostic tools and analysis techniques to better understand and improve their firm's service operations. This study is designed to give service innovation managers and e-marketers instantaneous and continuous improvement in the quality of their e-service designs. Originality/value – One of its contributions lies in increasing the ability of managers to improve their knowledge and skills for responding to the e-service innovation process. It adds to the growing literature on the innovation process for financial services. While the study answers a number of salient questions, it also produces a stimulus for further investigation of service innovation through the provision of future research directions in this area.
Article
Purpose The objective of this study is to explore the types of innovation that are predominant in UK SMEs, whether they are predominantly radical or incremental, and to investigate the impact of these innovations on performance. Design/methodology/approach A web‐based survey instrument was used to administer survey questionnaires to a sample of UK SMEs in manufacturing, engineering, electronics, information technology and telecommunications industries. The response rate was 13.8 percent. Relevant statistical analytical techniques including regression for analysis was then used. Findings It is found that the SMEs tend to focus more on incremental than radical innovations and that this focus is related to growth in sales turnover. Practical implications It is not such a bad idea for SMEs, particularly those operating in high technological industries, to focus on incremental innovations as these are actually related positively to sales turnover growth. Originality/value An investigation of the types of innovation that SMEs pursue is pioneering in the field as previous studies of this type have been based on large firms. The contention that the raison d'etre of SMEs is to develop radical innovations is not supported empirically, at least for the sample of SMEs. In addition, it is found that the age of an SME is not related to its focus on either incremental or radical innovation. These are the contributions of this paper.
Article
Purpose – The purpose of the paper is to discuss various contractual issues that could encourage industrial service innovations with special reference to improving operation and maintenance process effectiveness of complex and advanced production facilities in the capital-intensive industries. Design/methodology/approach – A case study was performed to study the influence of contractual relationships on industrial service innovations. The study focused on contractual relationships between service companies that sell operation and maintenance services to production facility operators in the Norwegian oil and gas industry. Findings – The case study shows that service innovations are desired in most of the operation and maintenance contracts, but existing contractual relationships most often do not support innovations. Moreover, contract duration, contract type and control mechanisms can influence cooperation and collaboration during contract execution. Research limitations/implications – The findings are based on a case study with participants from the Norwegian oil and gas industry. The study is limited to knowledge and technology based services required to support operation and maintenance of advanced, complex and integrated production facilities. However, we believe that the study is of value for other capital-intensive industries such as mining, energy, paper and pulp, chemical, etc. Originality/value – The development of contracts that support industrial service innovations and create an environment for cooperation and collaboration could be of value to improve the efficiency and effectiveness of operation and maintenance processes in the capital-intensive industries. Studies focusing on improving contractual relationships and service innovations for operation and maintenance services are scant.
Article
Purpose – The purpose of this study is to identify different service innovation drivers, innovation process activities and to understand industrial services innovation management and coordination, as well as to develop a framework for industrial service innovation management and coordination. Design/methodology/approach – The study involved collection of information and data from the literature and the Norwegian oil and gas (O&G) industry. A survey was conducted to get an overview of existing practices and guided interviews were conducted to confirm the findings of the survey. Findings – The study indicates that the market needs are considered the most important innovation process driver, feedback from the customers is the most important activity to encourage service innovations, whilst return on investments is the most important decision-making factor in evaluating innovation feasibility. Employees are the most important source of innovation ideas. Furthermore, interactions between different companies, as well as involvement of customer, employees and suppliers in the innovation process are becoming increasingly important. Practical implications – The study shows that service providers and receivers often collaborate in the innovation processes, and that many of the activities are performed simultaneously. This results in the collaborative parties needing to put resources on managing and coordinating the innovation process in a structured, effective and efficient way. The proposed framework for service innovation management and coordination provides practitioners with a structured approach to manage industrial service innovations. Research limitations/implications – The findings are based on the data collected from a number of companies from the O&G industry in Norway. Originality/value – The paper identifies different innovation process drivers and activities and proposes a modified framework for industrial services innovation management and coordination based on the study analysis, interaction with the practitioners and using available literature on innovation management.
Article
While most services innovation studies are concentrated on the OECD or EU countries, research on services innovation in the non-OECD context is still rare. This study investigates innovation behaviour of a certain group of services - knowledge-intensive business services (KIBS), compared with the manufacturing sector in Singapore. The main findings of this study are: (1) KIBS firms have higher innovating ratio than manufacturing firms, but innovating manufacturing firms are more likely to do R&D than innovating KIBS firms; (2) KIBS firms have higher human capital intensity, training spending intensity, innovation spending intensity, and R&D spending intensity than manufacturing firms; (3) KIBS firms and manufacturing firms have similar innovation objectives, although some delicate nuances do exist; (4) KIBS firms are less likely to have overseas partners for innovation collaboration than manufacturing firms; (5) there is a U pattern of innovation collaboration with geographic distance for both KIBS and manufacturing firms; (6) social capitals are important for KIBS firms' successful provision of innovation support to manufacturing clients; (7) the importance of spatial proximity varies over different phases of innovation support.
Article
The topic of new service development has been relatively neglected in the literature on innovation and new product development. This paper explores some of the similarities and differences between new product development and new service development. It outlines the typical stages of the new product development process and then suggests how new product development in service organisations may differ because of the characteristics of services like intangibility and inseparability.
Article
In the current period of constrained economic conditions, this study initiates an analysis of customer relationship management (CRM) on the Web sites of financial service businesses. Customer relationship management is a critical differential that enables competitive edge for businesses focused on the affluent customer market. Though investment in marketing, sales and service innovation is limited under existing conditions, the analysis of the study on large financial businesses indicates that the businesses enable higher commerce, content and context, but lower and generally inadequate communication, community, connection and customization design on their Web sites. The analysis, conducted as an assignment by adult graduate students in an information systems course, contributes important insight into the competitive dynamics of customer relationship management for Web empowered financial service businesses striving to service the demanding affluent market. This study furnishes an expanded framework to research customer relationship management of financial service businesses competing in the paradigm of the Web.
Article
The aim of this research was to investigate how service firms evaluate their new service development (NSD) activities. A survey of marketing managers in UK service firms was used to elicit information on two subject areas. First, the firm's approach to NSD, its strategy, and the scope of its activity in this area. Second, the firm's approach to measuring performance at both the project and the programme level. It was found that although new services are an important source of revenue for most, firms are still not satisfied with their ability to develop new services. On the whole, service firms employ a limited number of measures of performance, and often these do not reflect the reasons behind development. Significantly, financial measures of performance are most often used by less innovative firms, fast followers employ customer-based measures of performance, and truly innovative firms measure performance along a number of softer internal dimensions. The management implications of these findings are discussed.
Article
Successful innovation is crucial for firm survival in high-technology service industries. This article reports on an empirical study, exploring internal innovation success factors—success factors associated with the innovating firm's competencies—by taking a decision-making perspective. The likelihood of innovation success is associated with the systematic reduction of decision-making uncertainty, as a result of organizational information gathering, diffusion, and processing activities. Effects of interfirm differences are investigated in the new service development phase of the innovation process. Cross-sectional data were collected about 251 innovation projects from companies in Europe, the United States, and Japan. Innovation success is found to be related positively and directly to how well informed and knowledgeable decision-makers are. Furthermore, the study provides evidence that a market orientation contributes as an internal success factor: An organizational climate favorable to information sharing powerfully mediates the positive effects of intelligence gathering with respect to customers and technology. The effects of competitor orientation carry a negative sign, and managerial seniority appears not to play a major role in this turbulent business. Managerial and research implications are provided.
Article
In the unfolding knowledge-based economy, services do matter. But while they are increasingly seen to play a pivotal role in innovation processes, there has been little systematic analysis of this role. This essay presents a four-dimensional model of (services) innovation, that points to the significance of such non-technological factors in innovation as new service concepts, client interfaces and service delivery system. The various roles of service firms in innovation processes are mapped out by identifying five basic service innovation patterns. This framework is used to make an analysis of the role played by knowledge-intensive business services (KIBS) in innovation. KIBS are seen to function as facilitator, carrier or source of innovation, and through their almost symbiotic relationship with client firms, some KIBS function as co-producers of innovation. It is further argued that, in addition to discrete and tangible forms of knowledge exchange, process-oriented and intangible forms of knowledge flows are crucial in such relationships. KIBS are hypothesised to be gradually developing into a "second knowledge infrastructure" in addition to the formal (public) "first knowledge infrastructure", though there is likelihood of cross-national variations in the spill-over effects from services innovation in and through KIBS, and in the degree to which KIBS are integrated with other economic activities. Finally, some implications for innovation management and innovation policy are discussed.
Article
Whether or not industrialized nations are experiencing a fundamental shift from a manufacturing- to a service-based economy may be a matter of debate. However, the service sector is clearly growing at an explosive rate, particularly in comparison with manufacturing. With this in mind, we need to better understand how the successful development of new services differs from that of new products. Such understanding requires identifying the critical success factors for new service development (NSD), as well as contrasting them with the factors underlying successful new product development (NPD).