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Defining service innovation: A review and synthesis
Lars Witell
a,e,
⁎, Hannah Snyder
b
,AndersGustafsson
a,c,
⁎,PaulFombelle
d
, Per Kristensson
a
a
CTF, Service Research Center, Karlstad University, Sweden
b
Logistics and Quality Management, Linköping University, Sweden
c
BI-Norwegian School of Management, Norway
d
College of Business Administration, Northeastern University, United States
e
Business Administration, Linköping University, Sweden
abstractarticle info
Article history:
Received 1 November 2015
Received in revised form 1 December 2015
Accepted 1 December 2015
Available online xxxx
Research on service innovation appears in several research disciplines, with important contributions in market-
ing, management, and operations research. Although the concept is widely used, few research papers have ex-
plicitly defined service innovation. This dearth of research is the motivation for the present study. Through a
systematic review of 1301 articles on service innovation appearing in academic journals between 1979 and
2014, this article examinesresearch defining service innovation. The study identifiesthe key characteristics with-
in 84 definitions of service innovation in different perspectives (assimilation, demarcation and synthesis) and
shows how themeaning of the concept is changing. The reviewsuggests that the largevariety in definitionslimits
and hinders knowledge development of service innovation.
© 2015 Elsevier Inc. All rights reserved.
Keywords:
Service innovation
Literature review
Innovation
Value creation
1. Introduction
Academic research is reflecting an increasing focus on service inno-
vation (Dotzel, Shankar, & Berry, 2013; Ordanini & Parasuraman, 2010)
through an increased number of publications and interest from diverse
research disciplines (Carlborg, Kindström, & Kowalkowski, 2014;
Toivonen & Tuominen, 2009). However, the concept of service innova-
tion is broad and loosely defined and needs further exploration and de-
velopment (Ostrom et al., 2010). The definition of service innovation is
especially problematic because no common understanding exists re-
garding its meaning (Flikkema, Jansen, & Van Der Sluis, 2007;
Toivonen & Tuominen, 2009).
Theory building on service innovation is still novel (Flikkema et al.,
2007), which explains the rather vague and dispersed definitions of
the core concept. For example, this vagueness can be seen in the inter-
changeable use of new service development (NSD) and service innova-
tion (Menor, Tatikonda, & Sampson, 2002). In addition, the term service
innovation is also used to acknowledge a new service, that is, an inven-
tion that has not been successfully introduced on the market
(Schumpeter, 1934). Also, contrasting views exist regarding how new
an innovation needs to be (Toivonen & Tuominen, 2009) and on how
to evaluate the value of an innovation (Skålén, Gummerus, &
Magnusson, 2014). By investigating how different definitions of service
innovation addressthese issues, the vagueness ofthe serviceinnovation
concept can be analyzed.
Through a systematic literature review, this study examines seem-
ingly divergent perspectives of service innovation and identifies unique
and shared characteristics in definitions of service innovation. The com-
monly used assimilation, demarcation, and synthesis perspectives on
service innovation (Coombs & Miles, 2000) claim to be separate and dis-
tinct, and this study aims to identify how the definitions of service inno-
vation have developed across perspectives. This article presents an
exhaustive examination of research on service innovation, particularly
research that addresses the problem of conceptualizing and defining
service innovation. The basis of the article is a literature review of ser-
vice innovation research published in academic journals between
1979 and 2014. These articles range across such disciplines as service
management, marketing, business, social science, engineering, and
health care research. The study uses network analysis and text mining
to identify how research defines service innovation and discusses
how the definitions of service innovation have developed on four issues
(a processor outcome, invention versus innovation, new for whom and
exchange value versus use value) across perspectives.
2. Defining service innovation
2.1. Different perspectives in service innovation research
To identify the differences in basic assumptions about service inno-
vation, Coombs and Miles (2000) categorize existing research into
three different perspectives: assimilation, demarcation, and synthesis.
Journal of Business Research xxx (2015) xxx–xxx
⁎Corresponding authors.
E-mail addresses: lars.witell@liu.se (L. Witell), hannah.snyder@liu.se (H. Snyder),
anders.gustafsson@kau.se (A. Gustafsson), p.fombelle@neu.edu (P. Fombelle),
per.kristensson@kau.se (P. Kristensson).
JBR-08791; No of Pages 10
http://dx.doi.org/10.1016/j.jbusres.2015.12.055
0148-2963/© 2015 Elsevier Inc. All rights reserved.
Contents lists available at ScienceDirect
Journal of Business Research
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
Studies using the assimilation perspective are the most numerous
(Gallouj, 2002) and focus on the impact of new technology, which
early studies considered the main driver of service innovation (Tether,
2005; Toivonen & Tuominen, 2009). The assimilation perspective
can be used to study and analyze service innovation by using and
adapting the same theories and instruments developed for traditional
product innovation research, but without translation or modification
(e.g., Evangelista, 2000; Miozzo & Soete, 2001). An important assump-
tion of this perspective is that the service sector is becoming more
technology- and capital-intensive (Gallouj & Savona, 2008). The assim-
ilation approach can be traced back to Pavitt's (1984) sectorial taxono-
my for innovation, in which services are supplier-dominated; in other
words, service firms are passive recipients of innovations from other
sectors.
The demarcation perspective, by contrast, suggests that service in-
novationfundamentally differs in nature and character fromproduct in-
novation (Coombs & Miles, 2000). This perspective challenges the
theoretical foundation for innovation studies (Drejer, 2004)andargues
for new service-specific theories and concepts with which to under-
stand and analyze service innovation (Barras, 1986; Hipp & Grupp,
2005; Tether, 2005). Demarcation researchers argue that studies on in-
novation have failed to recognize the specificities of services and have
overlooked the important contributions that services make to products
(Gadrey, Gallouj, & Weinstein, 1995). In particular, demarcation studies
illuminate important elements that previous research has neglected
(Drejer, 2004; Droege, Hildebrand, & Forcada, 2009). Research has em-
phasized the peculiarities of service output and processes, such as the
intangible nature of services, the need for customer integration, and
the contributions of organizational knowledge and non-technological
elements (Hipp & Grupp, 2005). Drejer (2004) argued that one of the
most important contributions of the demarcation perspective is the ex-
pansion of what can be considered an innovation.
The synthesis perspective is a critique of both the assimilation and
the demarcation perspectives of service innovation (Coombs & Miles,
2000; Gallouj & Savona, 2008). The main idea of this perspective is
that theories on service innovation should be broad enough to encom-
pass innovation in both services and manufacturing (Coombs & Miles,
2000) and should provide an integrative perspective that is not limited
to technological innovations. The neo-Schumpeterian view of service
innovation (e.g., Drejer, 2004; Flikkema et al., 2007; Sundbo, 1997;
Toivonen & Tuominen, 2009) stresses that economic development is
driven by the emergence of new combinations (innovations) that are
economically more viable than previous solutions.
Even though all of these perspectives clearly contribute to the devel-
opment of the broad research field of service innovation, one can argue
that the differences in defining the concept and the understanding of
what a service innovation is create confusion. Different perspectives of
what service innovation entail and lead to different actions and use of
different methods, as will be described in the next section.
2.2. Divergence about the definition of service innovation
Well-developed definitions are essential to scientific theory building
(MacInnis, 2011; MacKenzie, 2003). MacKenzie (2003) stated that a
major shortcoming of many research articles is that they fail to ade-
quately define the focal concept(s) of the study. A definition can be
seen as a statement that captures the meaning, the use, and the function
of a term or concept (MacInnis, 2011). Precisely defining and labeling
constructs is fundamental forknowledge sharingand perspectivetaking
and enables others tounderstandthe theory and be able to criticize and
reproduce the observations. MacKenzie (2003) argued that a good def-
inition should specify the concept's conceptual theme in unambiguous
terms in a manner that is consistent with prior research and that clearly
distinguishes it from related concepts. Failure to define a concept can
produce a series of subsequent problems. A theoretical definition must
also be followed by an operational definition that translates the verbal
meaning into a prescription for measurement to enable empirical re-
search. Poor conceptualization makes it difficult to develop proper mea-
surements and specify relationships between different concepts, which
can undermine the study's credibility. Failure to specify the meaning of
a particular concept leaves room for misunderstanding, vagueness, and
doubt about the quality of the study.
The debate about what an innovation is and how to define it goes
back almost a century (Schumpeter, 1934). Independent of conceptual-
ization, articles differ greatly regarding what service innovation is and
how it is used. Building on a Schumpeterian approach, Toivonen and
Tuominen (2009 p. 893) defined service innovation as “a new service
or such a renewal of an existing service which is put into practice and
which provides benefit to the organization that has developed it; the
benefit usually derives from the added value that the renewal provides
the customers. In addition, to be an innovation the renewal must be
new not only to its developer, but in a broader context.”This definition
highlights some interesting aspects of service innovation. First, the def-
inition separates the outcome of service innovation from the process of
development. Second, for an invention to become an innovation, it must
be used and putinto practice. Third, the invention must be new to one of
the actors. Fourth, the invention must create value for some actor. In the
following, these four issues will be discussed in detail.
Frequently, researchers do not make clear whether or not they are
using the concept of innovation to refer to the innovation process or
to the outcome of this process (Toivonen & Tuominen, 2009). Literature
on new service development (NSD) commonly views service innova-
tion as a process and often uses the terms NSD and service innovation
interchangeably (Menor et al., 2002). For example, Biemans, Griffin,
and Moenaert (2015), p. 2) stated that one should view NSD and service
innovation as synonymous; they defined both concepts as a “process of
devising a new or improved service, fromidea or concept generation to
market launch”. Furthermore, Skålén et al. (2014) argues that the pro-
cess of developing new services cannot be separated from the imple-
mentation and value creation of the new services, and that the two
should be seen as different stages of service innovation. In this sense,
Skålén et al. (2014) extend the definition of service innovation to in-
clude development and realization as well as the outcome. However,
doing so creates confusion when talking about successful service inno-
vation, since it is not clear if this statement refers to the successful pro-
cess or outcome.
Schumpeter (1934) views innovation as a novel combination of new
and existing knowledge, which should be clearly distinguished from in-
ventions. Schumpeter argued that to differentiate the new offering from
the process of its commercialization and the evaluation of the outcome.
While an invention can refer to any new product, service, process, or
idea, an invention must be introduced in the market and make a sub-
stantial profit before it can be considered an innovation because inven-
tions in themselves have no inherent value. Gummesson (2014) argues
that commercialization and diffusion of inventions is of more value to
firms and societies than the initial invention. As a consequence, there
is a need to distinguish between inventions and innovations.
Interesting differences occur in the interpretation of “new”.
Schumpeter (1934) argued that innovation not only creates value for
the firm that developed it, but also changes the market in such a way
that other companies imitate and follow, which leads to development
of the branch. While this view of newness is fairly strict, recent develop-
ments in the service innovation literature have departed from this view
towards regarding new as the degree of newness. Defining innovation
based on thedegree of newness or novelty is now a common wayto cat-
egorize innovation (Sundbo, 1997; Toivonen & Tuominen, 2009). A
common separation is to divide innovations into radical and incremen-
tal, where radical usually refers to innovations that are new to the world
and incremental innovations are those that are new to the market
(Sundbo, 1997). Following this view, innovations that are only new to
the firm that adopts them should not be considered as innovations.
Helkkula (2010) stated that companies and other external actors cannot
2L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
independently decide whether something is an innovation. This issue
was also raised by Hipp and Grupp (2005), who identified that firms
have difficulty distinguishing between “real”innovations and incre-
mental customer adaptions.
Traditionally, the benefit of innovations is measured in economic
value for the developing firm, although this has changed in recent defi-
nitions. Consequently, some researchers whoview service innovation as
outcome or change instead define value from the customer perspective
(Lusch & Nambisan, 2015; Michel, Brown, & Gallan, 2008). The main ar-
gument for this change is that defining innovation in the form of eco-
nomic value for the developer provides a limited view of what an
innovation is. Even if a new service creates significant benefits for cus-
tomers, theservice might not generate revenue to the developer. For ex-
ample, innovationin health care might actually generate increased costs
for the developer or society, but can still improve well-being for a
patient and provide substantial value to individuals and society. In
addition, there is a growing trend for innovations that others can use
free of charge, where the benefit for the developer is the intrinsic enjoy-
ment of creating and peer acknowledgment, rather than monetary
value (von Hippel, 2005).
Followingthe debate on the definition of service innovation through
the four issues raised above, one could argue that service innovation is
likely to be the result of a number of components, contextual aspects,
actors, and interactions (Toivonen & Tuominen, 2009). Consequently,
innovation research should take a broad perspective of the process for
determining what an innovation is. However, a broad definition of ser-
vice innovation should not be misinterpreted as a vague definition as
the latter makes it difficult to know what objects is being studied. Of
course, a better understanding and knowledge of the crafting of innova-
tions is essential, both for companies wanting to innovate and theory
building. However, this fact does not imply that considering and defin-
ing the outcome of this process is less important. In the following
section, the present review and analysis of definitions of service innova-
tion used in articles from 1979 to 2014 is presented.
3. Research method
This studyused a systematic literature review to identifyarticles that
define or conceptualize the concept of service innovation. In line with
MacInnis's (2011) framework for conceptual contributions in market-
ing, the analysis involves differentiating between perspectives of service
innovation. Such a distinction provides a typological framework that il-
lustrates how entities (definitions and articles) are different by reveal-
ing the underlying key characteristics of the different perspectives of
service innovation. The present study examines not only how the
three perspectives are unique, but also what they have in common
and whether an emergent perspective of service innovation can be
identified.
3.1. Search strategy
The review identified relevant articles (Tranfield, Denyer, & Smart,
2003), which enabled a transparent, documented research process
with criteria for including and excluding articles. The systematic review
involved the following steps: State research questions, develop guide-
lines for collecting literature, decide on inclusion and exclusion criteria,
develop a comprehensive search plan for finding literature, develop a
codebook for classifying and describing literature, code the literature,
and synthesize the literature (Tranfield et al., 2003).
The present study explores the various ways in which service inno-
vation has been defined in the literature in order to determine whether
the three perspectives differ in their definitions. The main search strat-
egy identified research articles that defined the concept of service inno-
vation. In order to capture this, inclusion and exclusion criteria were
developed. The initial inclusion criteria were broadto ensure that all rel-
evant articles were identified, were peer-reviewed empirical or
conceptual articles, were published in English, and were fully accessible
and that the main focus was on service innovation or included a defini-
tion of service innovation.
A database search was conducted to find articles that contained
the following terms in their abstract, title, or keywords:
“service(s) innovation”and “innovation in service(s).”The scope of
the search was not limited to any particular field, subject of research,
or journal so that a full overview of service innovation research could
be obtained. However, closely related terms such as service develop-
ment, was purposely not included (Menor et al., 2002). In other
words, thisarticle focuses on defining service innovation as an outcome,
not solely as the development process.
3.2. Sample selection
The initial search yielded 1301 empirical or conceptual articles, 1003
of which were in English. Fig. 1 provides an overview of the literature.
All articles were scanned for relevance, which revealed two cleartrends.
First, although many of the articles usedthe term “service innovation”in
the abstract, few actually defined, conceptualized, or emphasized the
term. Second, many ofthose articles that did specifically focus on service
innovation did not provide a specificdefinition of theconcept. This lack
of a definition provides further merit to our claim that a clear under-
standing of service innovation is missing in the literature. In total, 300
articles that had a clear focus on service innovation were selected for
further analysis.
Two authors independently read the selected 300 articles to ensure
that they met the inclusion criteria and to identify those that defined or
conceptualized service innovation. Those authors compared and
discussed the results; in cases of disagreement, a third author was
consulted. The final sample included 84 articles that provided at least
one of the following: a clear definition, a conceptualization, or an explicit
referral to a specificdefinition or conceptualization of service innovation.
Several articles on the topic of service innovation used alternative
terms such as “innovation”(Hertog, Gallouj, & Segers, 2011)“innova-
tion in services”(Gallouj & Weinstein, 1997), “service-logic innovation”
(Michel et al., 2008)and“experience service innovation”(Fuglsang,
Sundbo, & Sørensen, 2011). Because these terms are used interchange-
ably to describe innovation in a servicecontext, all was considered to be
alternative concepts for service innovation.
3.3. Data analysis
To analyze the sample of articles, a combination of qualitative con-
tent analysis and quantitative analysis was used, which is a method
for systematically and objectively evaluating texts (Lombard, Snyder-
Duch, & Bracken, 2002). The analysis was conducted in three steps –
classification, coding, and text analysis –using qualitative text mining
(Feldman & Sanger, 2007). Researchers often face the question of how
to summarize text and determine what words and concepts are more
significant than others. To go further thanmerely summarize, quantita-
tive text analysis was used so that our review would be more than just
descriptive statistics and qualitatively comparing and present defini-
tions. Textmining, also known as textdata mining or knowledge discov-
ery from textual databases, refers to theprocess of extractinginteresting
and non-trivial patterns or knowledge from text documents (Feldman &
Sanger, 2007). The rationale for this process builds on social network
theory, which describes linkages among social entities or nodes in a net-
work and the implications of these linkages and can be used on text to
determine which words are significant (Xie, 2005). Different measures
of centrality were used to determine the significance of words in defini-
tions and comparing between different perspectives of service innova-
tion. Centrality refers to the positions of the node (in this case, words)
within the text. Generally, the higher the centrality measure, the more
significant or central the word is to the corresponding network (text).
3L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
That is, influential words are identified through their structural position
within the formed networks (Xie, 2005).
All selected articles were downloaded anddefinitions were captured
in digital plain-text format. Each article was then coded according to
several predetermined variables, such as context, definitions, approach,
and type of study (for example, empirical, conceptual) in order to de-
scribe the characteristics of the sample. All definitions were then sorted
into Coombs and Miles's (2000) commonly used perspectives of service
innovation; namely, assimilation, demarcation, and synthesis. This
approach served to analyze and classify the literature on service innova-
tion (Drejer, 2004; Droege et al., 2009; Droege et al., 2009). Perspectives
were identified using a combined strategy to classify definitions on the
basis of whether authors explicitly did or did not take a position on one
of the perspectives (Droege et al., 2009).
The study analyzed the specificdefinition of service innovation of-
fered in each article; by “cleaning”the definitions from “service innova-
tion is defined as …” and focusing only on the words included in the
actual definition of the concept. In addition, all common words such
as “and”or “of”were removed. All text were stemmed, a procedure
that involves reducing all words with the same stem to a common
form (Lovins, 1968). By using this method, the key characteristics for
the definitions of each perspective were identified, summarized and
visualized.
4. Findings
Of the 84 articles in the final sample, eleven used an assimilation
perspective, 38 useda demarcation perspective, and35 used a synthesis
perspective. This section presents the result of the text analysis, along
with a sub-set of illustrative examples of definitions within each
perspective.
4.1. Defining service innovation in the assimilation perspective
In the assimilation perspective, most articles that defined service in-
novation used the term “innovation”. This is consistent with the tradition
of taking concepts and definitions from product innovation and using
them in service research (e.g., Chan, Go, & Pine, 1998; Ko & Lu, 2010;
Straub, 2011). The researchers applying this approach did not recognize
service as a separate category; rather, they used the term “innovation”
for products, services, and processes. The most central word in defini-
tions of service innovation within the assimilation perspective was
“new”(3.80), followed by product (2.32), process (2.19), organization
(2.11), service (1.59), and significant (1.40). Combined, this finding indi-
cates that service innovation is viewed as a new product, process, or ser-
vice that is significantly different from previous offerings. In addition, the
terms “organization”(2.11), “benefit”(0.80) and “successful”(0.73)
were used, which indicates a focus on outcome or producer of the new
service. This is also reflected in the centrality measures for the full-text
articles; in addition to “service”(5.06) and “innovation”(4.5), the
most central words were “new”(1.96), “firm”(1.86), “risk”(1.24),
“management”(1.15), “recourse”(1.11), “process”(1.06), “capability”
(1.06), “market”(0.98) and “product”(0.93). (See Table 1 and 2).
4.2. Defining service innovation in the demarcation perspective
The 38 articles adopting a demarcation used a variety of terms to re-
late to service innovation. The actual term “service innovation”was
most common, followed by “innovation”and a number of terms that
were only used once, such as “experience service innovation”
(Fuglsang et al., 2011)and“product-related service innovation”
(Gebauer, Krempl, Fleisch, & Friedli, 2008). This implies that the demar-
cation perspective is more diverse than theassimilation perspective, not
only for the concepts as such, but also for the interpretation of specific
concepts (See Table 3).
The most central words in definitions of service innovation within
the demarcation perspective were “service”(6.18), “new”(4.84),
“change”(1.51), customer (1.37), “offer”(1.30), “firm”(1.23), and “pro-
cess”(1.15). Notably, “service”was used 1.22 times in each definition.
These measures indicate that a view of service innovation as a new ser-
vice or new offer that entails some form of change for either the firm or
customer. However, definitions within the demarcation perspective put
less emphasis on the indented benefit of the innovation. Even if some
definitions use the term value “value”, looking at the frequency, this is
only used in 17% of the definitions. In addition, innovation is empha-
sized as a term in the actual definition, as a result of authors using the
word “innovation”in different ways. For example, (Lin, 2012)used
“innovation activities,”and Carvalho (2010) used “innovation patterns”
Inclusion criteria:
(1) Main focus on service
innovation
(2) Peer reviewed,
empirical or conceptual
(3) Published in English;
(4) Full text access.
Search terms:
“Service/es innovation’’, and
“lnnovation in service/es’’
Scopus database:
1301 articles
Selected for further
analysis:
300 articles
Final sample:
84 articles
Assimilation (n=11) Synthesis (n=35)Demarcation (n=38)
Excluded after second reading (n=216)
Perspectives (Coombs and Miles, 2000)
Fig. 1. An overview of the literature review.
4L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
in their definitions of service innovation. In the full-text articles, in addi-
tion to “service”(4.03) and “innovation”(3.18), terms such as “firm”
(1.19), “new”(1.1), “market”(0.94), “management”(0.89), “customer”
(0.8) were the most central words (See Table 4).
Even if this still suggests an internal focus in terms of firm and man-
agement,in comparison to the assimilation perspective, the centrality of
customers is emergent both in definition and full text.
4.3. Defining service innovation in the synthesis perspective
The synthesis perspective includes 35 articles that defined service
innovation. “Service innovation”and “innovation”were the two most
used concepts, followed by concepts that were only used in individual
studies, such as “health-service innovation”(Windrum & García-Goñi,
2008)“service-logic innovation”(Michel et al., 2008), “innovation in
services”(Sundbo, 1997), and “market-creating service innovation”
(Berry et al., 2010). The greater reliance on the concepts of service
innovation and innovation is consistent with the purpose of the
synthesis perspective, which is to encompass all types of innovation
(See Table 5).
The most central word in definitions ofservice innovation within the
synthesis perspective was “service”(3.23), followed by “new”(2.78),
“change”(1.4), “customer”(1.35), “product”(1.2), and “process”
(1.18). Similarly to the demarcation perspective, the centrality mea-
sures indicate that service innovation is viewed as a new service, prod-
uct or process that implies some degree of change for the customer.
However, within definitions of service innovation in the synthesis per-
spective, the emphasis on the benefit is slightly higher as both “value”
Table 2
Centrality measures within assimilation.
Definition Full text
Term Occurrences Frequency Centrality Term Occurrences Frequency 1.1.1.1.1.1.1 Centrality
New 13 1.18 3.80 Service 1501 136.46 5.06
Product 6 0.55 2.32 Innovation 1756 159.64 4.50
Process 5 0.46 2.19 New 606 55.09 1.96
Organization 5 0.46 2.11 Firm 797 72.46 1.86
Service 5 0.46 1.59 Risk 417 37.91 1.24
Significantly 3 0.27 1.41 Management 460 41.82 1.15
Design 2 0.18 1.23 Resource 172 15.64 1.11
Group 2 0.18 1.23 Process 369 33.55 1.06
Idea 2 0.18 1.23 Capability 135 12.27 1.06
Introduction 2 0.18 1.23 Market 311 28.27 0.98
System 2 0.18 1.23 Product 322 29.27 0.93
Change 4 0.36 1.07 Innovative 241 21.91 0.83
Market 3 0.27 0.91 Model 331 30.09 0.82
Insurance 4 0.36 0.82 Industry 258 23.46 0.77
Benefit 2 0.18 0.80 Result 215 19.55 0.77
Innovation 2 0.18 0.76 Ability 110 10 0.75
Improve 2 0.18 0.73 Offer 99 9 0.75
Launch 2 0.18 0.73 Development 266 24.18 0.73
Successful 2 0.18 0.73 Activity 203 18.46 0.73
Adoption 1 0.09 0.63 System 206 18.73 0.72
Application 1 0.09 0.63 Competency 200 18.18 0.68
Competition 1 0.09 0.63 Level 232 21.09 0.67
Define 1 0.09 0.63 Customer 130 11.82 0.67
Domain 1 0.09 0.63 Knowledge 266 24.18 0.65
Firm 1 0.09 0.63 Variable 241 21.91 0.63
Table 1
Definitions of service innovation from an assimilation perspective.
Assimilation
Source Term Definition
Pearson (1997) Innovation “Changes in the process of producing existing lines of insurance for example, improvements in risk assessment (new policy
conditions, new classifications of existing risks), in marketing, and in organization. Primary product innovation (PPI) can be
defined as new products for new risks, which together sometimes constitute new branches of the insurance industry, in the
way that, for instance, employers' liability and railway accident insurance formed branches of accident insurance.”(p. 238)
Chan et al. (1998) Innovation “The purposeful and organized search for changes, and the systematic analysis of the opportunities such changes might offer
for economic or social innovation.”(p.115)
a
Ko and Lu (2010) Innovation “Technology-based inventions, driven by the emergence of new markets or new service opportunities. (p. 164)
Straub (2011) Innovation “Successful launching of new, improved or more competing products, services or organization structures.”(p.182)
Brown and Osbourn (2013) Innovation “The intentional introduction and application within a role, group or organization of ideas, processes, products or
procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, the group organization or
wider society.”(p.188)
b
Ferreira, Raposo, and Fernandes
(2013)
Innovation “Innovation is the mechanism by which firms design and launch the new products, processes and systems necessary to
meeting changes both in marketplace technologies and in models of competition”(p.734)
Björk (2014) Innovation “New products, services, systems, and processes”(p. 183)
Giannopoulou et al. (2014) Service
Innovation
”A type of product innovation involving the introduction of a service that is new or significantly improved with respect to its
characteristics or to its intended uses”(p.25)
Henrike and Schultz (2014) Innovation “Creation of solutions, which can either be emerging incremental adaptations or completely new solutions for products,
services, or processes to significantly benefit the care situation of patients”(p.330)
Kuo, Kuo, and Ho (2014) Service
Innovation
“A new way of business thinking to reform relatively conservative and inflexible operational
procedures and processes, which can transform organizations to better meet the needs of their markets “(p.697)
a
Adopted from Drucker (1985).
b
Adopted from West and Farr (1990).
5L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
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dx.doi.org/10.1016/j.jbusres.2015.12.055
(0.64) and “benefit”(0.63) is putforward. This pointalso emerges in the
in full text; in addition to the centrality of “service”(4.08) and
“innovation”(3.81), the terms “firm”(1.43), “new”(1.07), “customer”
(0.89), “process”(0.83), “market”(0.76), “knowledge”(0.67),“product”
(0.64) and “value”(0.59) were identified as the most central words (See
Table 6).
5. Discussion
5.1. A shared view of service innovation as a new service
The view of service innovation as a new service (offering) cuts across
the three perspectives of assimilation, demarcation, and synthesis. In the
assimilation perspective, “new”and “service”have the highest centrality
measures in the full-text analysis. For demarcation and synthesis “new”
and “service”come out as the characteristics most central in the defini-
tions (not the full text analysis). Interestingly, the word “new”was used
more than once in each definition, on average. It seems that simply defin-
ing service innovation as a “new service”is the most common interpreta-
tion, which implies that every firm, to some extent, is innovative and
develops service innovations. However, viewing service innovation, as a
new service is not without problems, since “new”is a relative concept
(Toivonen & Tuominen, 2009). A greater emphasis on newness suggests
a radical service innovation and newness can mean new to the firm
(Mansury & Love, 2008), new to a market, or new to the world
(Mansury & Love, 2008; Toivonen & Tuominen, 2009). The conceptualiza-
tion of service innovation should extend beyond a new service for a firm
and put real meaning behind the characteristic “new.”By emphasizing
Table 3
Definitions of service innovation from a demarcation perspective.
Demarcation
Source Term Definition
Oke (2007) Service innovation “New developments in activities undertaken to deliver core service products for various reasons, e.g. to make those
core service products more attractive to consumers.”(p. 566)
Gebauer et al. (2008) Product-related
service innovation
“An offering not previously available to a firm's customers, resulting from additions to or changes in the service
concept. “(p. 388)
Chen, Tsou, and Huang (2009) Service delivery
innovation
“May be regarded as novel mechanisms of delivery that offer customers greater convenience and improve a firm's
competitive position.”(p. 39)
Cheng and Krumwiede (2010) Service innovation “Fundamental change in services that represent revolutionary changes in technology or service benefits.”(p.162)
Lin, Chen, and Chiu (2010) Service innovation “Manufacturers' engagement in various innovation activities to enhance customer satisfaction, including after-sale
services, warranty policy, maintenance routines, and order placement systems.”(p. 114)
Love, Roper, and Hewitt-Dundas
(2010)
Service innovation “New or significantly improved service”(p. 987)
Salunke, Weerawardena, and
McColl-Kennedy (2011)
Service innovation “As the extent to which new knowledge is integrated by the firm into service offerings, which directly or indirectly
results in value for the firm and its customers/clients.”(p. 1253)
Enz (2012) Service innovation “The introduction of novel ideas that focus on services that provides new ways of delivering a benefit, new service
concepts, or new service business models through continuous operational improvement, technology, investment
in employee performance, or management of the customer experience.”(p.187)
Jian and Wang (2013) Service innovation ”Enterprises' intangible activities formed in the process of service, using a variety of innovative ways to meet
customer needs and maintain competitive advantage.”(p. 27)
Breunig et al. (2014) Service Innovation “New service experience or service solution that consists of one or several of the following dimensions: a new
service concept, new customer interaction, new value system/business partners, new revenue mode or new
organizational or technological service delivery system”(p.46)
Table 4
Centrality measures within demarcation.
Definition Full text
Term Occurrences Frequency Centrality Term Occurrences Frequency Centrality
Service 56 1.22 6.18 Service 7642 166.13 4.03
New 38 0.83 4.84 Innovation 5995 130.33 3.18
Change 12 0.26 1.51 Firm 2211 48.07 1.19
Innovation 18 0.39 1.38 New 2060 44.78 1.1
Customer 15 0.33 1.37 Market 1761 38.28 0.94
Offer 10 0.22 1.30 Management 1650 35.87 0.89
Firm 12 0.26 1.23 Customer 1485 32.28 0.8
Process 12 0.26 1.15 Research 1299 28.24 0.7
Product 8 0.17 0.98 Product 1260 27.39 0.68
Market 5 0.11 0.96 Business 1167 25.37 0.63
Introduce 5 0.11 0.80 Process 1081 23.5 0.59
Organization 5 0.11 0.77 Performance 917 19.93 0.5
Delivery 5 0.11 0.76 Value 911 19.8 0.49
Technological 4 0.09 0.75 Model 840 18.26 0.45
System 6 0.13 0.74 Capability 747 16.24 0.4
Value 8 0.17 0.71 Development 738 16.04 0.4
Result 7 0.15 0.68 Knowledge 724 15.74 0.39
Organizational 3 0.07 0.57 Industry 712 15.48 0.38
Offering 5 0.11 0.56 Strategy 674 14.65 0.37
Development 3 0.07 0.54 Organization 605 13.15 0.33
Previously 4 0.09 0.53 Resource 599 13.02 0.32
Deliver 4 0.09 0.53 Technology 571 12.41 0.31
Idea 3 0.07 0.53 Relationship 560 12.12 0.30
Individual 5 0.11 0.53 Orientation 549 11.75 0.29
Core 2 0.04 0.52 Innovative 537 11.38 0.29
6L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
newness, researchers and managers can identify which organizational ar-
rangements are necessary in order to develop radical service innovations.
5.2. What characterizes service innovation in assimilation, demarcation,
and synthesis research?
This research questions the suggestions posed by prior research that
synthesis is replacing assimilation and demarcation in research on ser-
vice innovation (Carlborg et al., 2014). Based on our systematic review,
the prevalence of the synthesis perspective seems to have been
overstated; while the synthesis perspective is growing and gaining
strength, the number of articles adopting assimilation or demarcation
perspectives has neither decreased nor disappeared. As an example,
recent papers have defined service innovation according to the assimi-
lation perspective (e.g., Björk, 2014; Castellacci, 2014; Giannopoulou,
Gryszkiewicz, & Barlatier, 2014; Henrike & Schultz, 2014), which sug-
gests that the assimilation perspective might even be regaining its
strength. In the following, this researchwill highlight thedifferences be-
tween the definitions of service innovation in the three perspectives
and question and explain why the relevance of the service innovation
concept might be lost (See Table 7).
To emphasize the differences in perspectives different labels to spec-
ify the concept's conceptual theme can be used. The use of theterms “in-
novation”for assimilation, “services innovation”for demarcation, and
“service innovation”for synthesis is consistent with the origin and key
characteristics used in each perspective. Labeling the concept to
Table 5
Definitions of service innovation from a synthesis perspective.
Synthesis
Source Term Definition
Gallouj and Weinstein (1997) Innovation “Any change affecting one or more terms of one or more vectors of characteristics (of whatever kind–technical,
service or competence)”(p. 547)
Van der Aa and Elfring (2002) Innovation “It encompasses ideas, practices, or objects which are new to the organization and to the relevant
environment, that is to say to the reference groups of the potential innovator.”(p. 157)
Michel, Brown,and Gallan (2008) Service-logic innovation “Finding new ways of co-solving customer problems.”(p. 50)
Berry et al. (2010) Market-creating Service
innovation
“An idea for a performance enhancement that customers perceive as offering a new benefit of sufficient appeal
that it dramatically influences their behavior, as well as the behavior of competing companies.”(p.156)
Toivonen and Tuominen (2009) Service innovation “New service or such a renewal of an existing service which is put into practice and which provides benefitto
the organisation that has developed it; the benefit usually derives from the added value that the renewal
provides the customers. In addition, to be an innovation the renewal must be new not only to its developer,
but in a broader context, and it must involve some element that can be repeated in new situations, i.e. it must
show some generalizable feature(s). “(p.893)
Ordanini and Parasuraman
(2010)
Service innovation “Offering not previously available to the firm's customers—either an addition to the current service mix or a
change in the service delivery process—that requires modifications in the sets of competences applied by
service providers and/or customers”
Love, Roper, and Bryson (2011) Innovation “The commercial application of new knowledge.”(p. 1438)
Cho, Park, and Kim (2012) Service innovation “Introduction of new or significantly improved services and products.”(p. 377)
Santamaría, Jesús Nieto, and
Miles (2012)
Service innovation “New serviceshave been introduced into the market, or (ii) existing services have been significantly improved or
important changes have been made to their basic characteristics, intangible components or desired purposes.
(p.148)”
Skålén et al. (2014) Service innovation “The creation of new value propositions by means of developing existing or creating new practices and/or
resources, or by means of integrating practices and resources in new ways”(p. 137)
Table 6
Centrality measures within synthesis.
Definition Full text
Term Occurrence Frequency Centrality Term Occurrence Frequency Centrality
Service 35 1 3.23 Service 10,872 221.88 4.08
New 34 0.97 2.78 Innovation 10,109 206.31 3.81
Change 11 0.31 1.4 Firm 3738 76.29 1.43
Customer 13 0.37 1.36 New 2818 57.51 1.07
Product 15 0.43 1.20 Customer 2329 47.53 0.89
Process 12 0.34 1.18 Process 2169 44.27 0.83
Exist 10 0.29 0.99 Market 2004 40.9 0.76
Innovation 12 0.34 0.87 Knowledge 1775 36.22 0.67
Market 9 0.26 0.82 Product 1661 33.9 0.64
More 7 0.2 0.69 Value 1550 31.63 0.59
Value 8 0.23 0.64 Study 1502 30.65 0.58
Benefit 7 0.2 0.63 Management 1489 30.39 0.57
Characteristic 5 0.14 0.59 Business 1486 30.33 0.57
Offer 5 0.14 0.55 Development 1042 21.27 0.40
Firm 6 0.17 0.54 Industry 1025 20.92 0.39
Idea 5 0.14 0.53 Activity 920 18.78 0.36
Perceive 4 0.11 0.53 Manufactur 908 18.53 0.35
Practice 6 0.17 0.52 Technology 874 17.84 0.34
Create 6 0.17 0.51 Organization 854 17.43 0.33
Develop 5 0.14 0.5 Change 851 17.37 0.33
Element 4 0.11 0.49 Effect 857 17.49 0.33
Significantly 5 0.14 0.45 Develop 821 16.76 0.32
Behavior 4 0.11 0.42 Organization 854 17.43 0.33
Performance 4 0.11 0.42 Change 851 17.37 0.33
Improve 5 0.14 0.42 Effect 857 17.49 0.33
7L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
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dx.doi.org/10.1016/j.jbusres.2015.12.055
emphasize its characteristics enables researchers to be more stringent
in defining and using the service innovation concept and helps make
it clearly distinguishable from related concepts (MacKenzie, 2003).
The assimilation perspective involves a technological view of inno-
vation and is driven by the development of new technology that can
contribute to the development of significant different offerings
(Coombs & Miles, 2000). In line with Schumpeter (1934);Ko and Lu
(2010, p. 164) suggested that innovations are “technology-based inven-
tions, driven by the emergence of new markets or new service opportu-
nities.”Inother words, the assimilation perspective aligns itself with the
Schumpeterian view of innovation, focusing on innovation as an out-
come that is new to the world and creates exchange value for the
firm. The definitions of innovation signal an internal perspective on in-
novation, emphasizing key characteristics such as product, process, and
organization, and suggesting that an innovation that is technological
and significantly different from an existing to a new solution should
have economic consequences for the firm. This type of definition can ex-
plain the emergence of better online banking or search engines, but it
only tells part of the story.
The demarcation perspective works well for understanding innova-
tion in specific industries, such as health care, retailing, and tourism. The
key characteristics revealed by the text analysis are change, customer,
offer and firm. The firm and customer dichotomy shows a traditional
view of the different actors in value creation; namely, that service inno-
vations appear in a business relationship between two actors. Hertog
et al. (2011), p. 1436) argued that a service innovation can be described
as “a new or considerably changed (new to the firm) product or service
…or introduced a new or considerably changed (new to the firm) pro-
cess innovation.”In the demarcation perspective, the definition of ser-
vice innovation starts to break free from a Schumpeterian view of
innovation in that it concerns the outcome, but focuses on inventions
that are new to the firm. This definition suggests that the change in
the offering does not need to be substantially new, introduced in the
market, or make a substantial profit in order to be considered a service
innovation. In practice, this means that all service firms develop service
innovations.
Theories and methods of service innovation in the synthesis per-
spective depart from a service logic (Michel et al., 2008). In particular,
the key characteristics in the definitions of service innovation are
viewed as change, customer, product, process, exist, more, and value.
This perspective implies a value proposition as a platform for value
cocreation in the customer context and that both product and process
can be part of the value proposition offered to customers as a service in-
novation (Skålén et al., 2014). Cullen (2008, p. 255) described service
innovation as being “created with a particular value proposition in
mind, which enables the user of the service to create value for them-
selves or their community.”Schumpeter has influenced the synthesis
perspective, but in certain aspects its conceptualization of service inno-
vation moves away from the original ideas. While Schumpeter (1934)
argued that the process of developing a new offering should be differen-
tiated from the process of its commercialization and evaluation of the
outcome, a synthesis perspective views service innovation as both the
development process and its outcome. Skålén et al. (2014 p.137) de-
fined service innovation as “the creation of new value propositions by
means of developing existing or creating new practices and/or re-
sources, or by means of integrating practices and resources in new
ways.”The interpretation of a service innovation in this sense is that it
can be a new development process or its outcome that is new to the
firm and creates value in use, but does not have to be introduced on
the market. The lack of precision in the service innovation concept
makes it ambiguous and does not distinguish it from related concepts
such as new service development.
5.3. Implications for research and practice
This systematic review of existing research on service innovation
makes a contribution to understanding what a service innovation is.
Previous literature reviews on service innovation have performed qual-
itative (e.g., Carlborg et al., 2014) or descriptive (Biemans et al., 2015;
Papastathopoulou & Hultink, 2012) analyses, including literature on
NSD. To extend previous research, our study uses network analysis
and text mining to achieve a detailed understanding of the key charac-
teristics of service innovation. Specifically, this research contributes by
identifying the characteristics in the definitions, and the development
of the view of service innovation used in assimilation, demarcation,
and synthesis perspectives. Using network analysis and text mining,
this systematic review provides several significant contributions to the
theoretical understanding of service innovation.
First, much of the research on service innovation has failed to define
the focal concept (MacKenzie, 2003). Although there is, to some extent,
a shared view of service innovation as a “new service”, this is an insuffi-
cient definition suggesting that all firms develop service innovations.
Using a theoretical, practical or policy perspective it is not fruitful to
claim that all firms are innovators, since it will not help us to understand
how innovations can help to build brands, firms or societies. For
example, in the assimilation perspective, innovation often means
“radical technical innovation”; in the demarcation perspective, it
often means “small process adaption”for a firm; in the synthesis per-
spective, it often refers to skills in new service development. Sharing
an overall view of service innovation enables theory building and re-
search to better operationalize service innovation in further empirical
studies.
Second, the present study identifies the key characteristics in defini-
tions of service innovation in each perspective. Product and process
exist in definitions across all three perspectives, but have proven insuf-
ficient for understanding service innovation (Gallouj & Savona, 2008).
In addition, the definitions of service innovation in each perspective
also emphasize unique key characteristics. Definitions in the
Table 7
Overview of how the three perspectives of service innovation define service innovation.
Assimilation Demarcation Synthesis
Description A perspective of service innovation
suggesting that knowledge on product
innovation holds for all types of offerings.
A perspective of service innovation
suggesting that innovation in service
industries is unique and needs to be
treated different from other types of
offerings.
A perspective of service innovation suggesting
that service as a perspective can be used to
understand innovation in all types of offerings.
Core concept Innovation Services innovation Service innovation
Key characteristics (Def.) Product, process, organization, and
significantly
Change, customer, offer, and firm Change, customer, product, process, exist,
more, and value
Service innovation as a process or outcome Outcome Outcome Process and outcome
Invention versus innovation Innovation Invention Invention
New for whom World Firm Firm
Exchange value versus use value Exchange value Use value Use value
Core references Ko and Lu (2010),Pearson (1997) Hertog, Gallouj and Segers (2011),
Agarwal and Selen (2009)
Gallouj and Weinstein (1997), Sundbo
(1997),Drejer (2004)
8L. Witell et al. / Journal of Business Research xxx (2015) xxx–xxx
Please cite this article as: Witell, L., et al., Defining service innovation: A review and synthesis, Journal of Business Research (2015), http://
dx.doi.org/10.1016/j.jbusres.2015.12.055
demarcation perspective introduced the firm and customer dichotomy
(Oke, 2007; Gebauer et al., 2008), while definitions in the synthesis per-
spective started to emphasize value (Skålén et al., 2014). Through intro-
ducing new key characteristics in the definition of service innovation,
service research has contributed with a broadened perspective on
what constitutes an innovation.
Third, Schumpeter (1934) was clear in his distinction between the
development process, the outcome,and the commercialization of inno-
vation. However, this distinction seems to have been lost in present re-
search following a demarcation or synthesis perspective on service
innovation. These two perspectives often include the development
process defining the concept of service innovation; and that the
commercialization process is ignored through the change of focus
from exchange value towards use value. Although, this enables service
researchers to identify new traits of service innovation it also hinders
further theoretical development since it will not help to explain why
some new services become successful and others not.
Different perspectives of service innovation can explain the content
and emergence of different types of innovations. Companies simply
need to balance their innovation efforts. In this classic dilemma, compa-
nies must make trade-offs between exploitation and exploration or in-
cremental and radical innovation if they are to survive, let alone
prosper. Service innovation adds a new dimension to the balancing ef-
fort (Gebauer et al. 2011), and, as seen above, several perspectives are
necessary to understand how to succeed with service innovation.
5.4. Limitations and further research
The present study has certain limitations. As with other literature re-
views in marketing and service management, the study only includes
studies published in academic journals and have excluded books and
other literature that could have been relevant. In addition, the study
only included research on service innovation using our selected search
terms in the title, abstract, or keywords. In particular, this limitation
could affectthe sample of articlestaking an assimilation perspective. Lit-
erature on innovation might employ an assimilation perspective using
servicesas an example of innovation without using the term “service in-
novation.”Such studies are not included and instead the study focused
solely on articles that define the concept of service innovation. As a re-
sult, many articles that do not explicitly define service innovation are
not included. To advance understanding of service innovation, further
research should address these identified shortcomings.
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