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The nature and fundamental elements of digital service innovation
Abstract
Purpose
This paper addresses the growing fragmentation between traditional and digital service innovation (DSI) research and offers a unifying metatheoretical framework.
Design/methodology/approach
Grounded in service-dominant (S-D) logic's service ecosystems perspective, this study builds on an institutional and systemic, rather than product-centric and linear, conceptualization of value creation to offer a unifying framework for (digital) service innovation that applies to both physical and digital service provisions.
Findings
This paper questions the commonly perpetuated idea that DSI fundamentally changes the nature of innovation. Instead, it highlights resource liquification—the decoupling of information from the technologies that store, transmit, or process this information—as a distinguishing characteristic of DSI. Liquification, however, does not affect the relational and institutional nature of service innovation, which is always characterized by (1) the emergence of novel outcomes, (2) distributed governance and (3) symbiotic design. Instead, liquification makes these three characteristics more salient.
Originality/value
In presenting a cohesive service innovation framework, this study underscores that all innovation processes are rooted in combinatorial evolution. Here, service-providing actors (re)combine technologies (or more generally, institutions) to adapt their value cocreation practices. This research demonstrates that such (re)combinations exhibit emergence, distributed governance and symbiotic design. While these characteristics may initially seem novel and unique to DSI, it reveals that their fundamental mechanisms are not limited to digital service ecosystems. They are, in fact, integral to service innovation across virtual, physical and blended contexts. The study highlights the importance of exercising caution in assuming that the emergence of novel technologies, including digital technologies, necessitates a concurrent rethinking of the fundamental processes of service innovation.
... As a metatheoretical lens, S-D logic views all interactions as value cocreation processes among specialized resource-integrating actors (Vargo and Lusch, 2017). Based on S-D logic, we conceptualize CDSI as "the continuous (re)combination of existing resources to create novel resources that are beneficial to actors in a digital or digitally enabled service context" (Lusch and Nambisan, 2015;Elo et al., 2023;Vargo et al., 2024). Furthermore, we understand cross-functional collaboration in this context as a cocreative resource integration process in which actors from different organizational functions combine their specialized skills and knowledge for mutual benefit. ...
... Furthermore, we understand cross-functional collaboration in this context as a cocreative resource integration process in which actors from different organizational functions combine their specialized skills and knowledge for mutual benefit. Vargo et al. (2024) suggest that the effectiveness of an actor's resources in such a cocreation process "relies on (1) the availability of resources from other actors and (2) the willingness and ability of other actors to engage in exchange and resource integration." Consequently, the success of cross-functional collaboration in CDSI depends on effective actor-to-actor interactions at the group level and actors' willingness and ability to integrate resources at the individual level. ...
... The unique properties of these technologies, such as their malleability and generativity-"a technology's overall capacity to produce unprompted change driven by large, varied, and uncoordinated audiences" (Zittrain, 2006(Zittrain, , p. 1980)-enable service innovation processes characterized by speed and unpredictability (Yoo et al., , 2012Nambisan et al., 2017). In addition, these technologies facilitate resource liquefaction, allowing information to be separated and transported independently of physical objects, which supports resource density-the efficient (re)combination of resources regardless of location or time (Normann, 2001;Lusch and Nambisan, 2015;Vargo et al., 2024). This "technology-dominated service context" (Ostrom et al., 2015, p. 145) has transformed the context of service innovation, presenting organizations with novel opportunities and challenges, such as rapidly changing market demands and the pressure to propose relevant value to customers faster (Osmundsen and Bygstad, 2022). ...
Continuous digital service innovation (CDSI) represents a shift toward flexible, iterative, and bottom-up approaches to service innovation in today’s rapidly evolving, technology-dominated service contexts. This study explores the critical role of cross-functional collaboration in CDSI, shedding light on its enablers and barriers at the individual and group levels. Based on service-dominant (S-D) logic, we conceptualize cross-functional collaboration as a cocreative resource integration process in which actors from different organizational functions combine their specialized knowledge and skills for mutual benefit. Based on semi-structured interviews with 50 informants from four Finnish organizations, our findings show that at the individual level, collaboration is influenced by individuals’ willingness and ability to integrate resources. At the group level, actor-to-actor interaction is facilitated by clear roles and responsibilities, shared objectives and practices, effective communication, and shared understanding. This study contributes to both research and practice by advancing our understanding of the emerging CDSI phenomenon, identifying the individual and group-level enablers and barriers to cross-functional collaboration in this context, and providing actionable insights for fostering collaboration to realize the potential of CDSI for organizations.
... The "ubiquitous, always on, always connected, smart, and global world" (Ostrom et al., 2015, p. 145) represents a fundamentally new context for service innovation. Digital infrastructures increase the speed and efficiency of resource integration (Barret et al., 2015;Yoo et al., 2010) and accelerate the pace of change and innovation in organizations (Lyytinen et al., 2016;Vargo et al., 2024;Yoo et al., 2012). In consequence, traditional stage-gate methods, such as the waterfall model, have become insufficient in terms of promoting service innovation (Paluch et al., 2020;Sjödin et al., 2020;Vargo et al., 2024) and organizations are increasingly adopting more flexible, iterative and bottom-up approaches, such as agile, lean, and DevOps, to manage their service innovation processes (Elo et al., 2023;Sjödin et al., 2020). ...
... Digital infrastructures increase the speed and efficiency of resource integration (Barret et al., 2015;Yoo et al., 2010) and accelerate the pace of change and innovation in organizations (Lyytinen et al., 2016;Vargo et al., 2024;Yoo et al., 2012). In consequence, traditional stage-gate methods, such as the waterfall model, have become insufficient in terms of promoting service innovation (Paluch et al., 2020;Sjödin et al., 2020;Vargo et al., 2024) and organizations are increasingly adopting more flexible, iterative and bottom-up approaches, such as agile, lean, and DevOps, to manage their service innovation processes (Elo et al., 2023;Sjödin et al., 2020). ...
... The concept of continuous digital service innovation (CDSI) reflects this paradigm shift (Elo et al., 2023). Defined as the continuous (re)combination of existing resources to create novel resources that are beneficial to actors in a digital or digitally enabled service context (Elo et al., 2023;Lusch & Nambisan, 2015;Vargo et al., 2024), CDSI integrates digital technologies and related infrastructural capabilities with continuous and agile development by promoting and enacting a service-dominant logic (Sjödin et al., 2020;Vargo & Lusch, 2016). Thus, it offers a unified framework for understanding service innovation in the digital age (Barrett et al., 2015;Lusch & Nambisan, 2015;Rabetino et al., 2023). ...
Continuous digital service innovation (CDSI) represents a shift toward flexible, iterative, bottom-up approaches to service innovation in today’s rapidly evolving technology-dominated service context. This new way of organizing for service innovation fosters an environment of continuous change and uncertainty, which is known to create paradoxical tensions. However, our understanding of the tensions inherent in CDSI and effective strategies for managing them remains limited. We address this gap by exploring the organizing tensions that surface as organizations organize for CDSI. We employ the paradox lens and combine existing literature with findings from two cases to identify three interrelated organizing tensions in CDSI: flexibility versus stability, autonomy versus control, and parts versus whole, and propose effective "both/and" strategies for managing these contradictory yet interrelated elements in organizations. We contribute to research and practice by advancing our understanding of the emerging CDSI phenomenon, its inherent tensions, and their effective management through paradoxical thinking.
... Secondly, existing approaches need to adequately consider the lifecycle of coopetition networks, often focusing on initiation or early growth phases without addressing the long-term sustainability and evolution of these networks [19]. Thirdly, S-D logic needs to be more integrated in coopetition frameworks [20], which can offer a more nuanced understanding of value co-creation, especially in ecosystems where transactional relationships are less prominent [21]. ...
... The service literature increasingly recognizes the critical role of technology in enhancing and transforming networks [21]. This transformation extends to creating technologysupported ecosystems, where technology is central in facilitating and exploring new avenues for value creation within networks [31]. ...
... This system comprises resource-integrating actors interconnected by shared institutional logic, facilitating mutual value creation through service exchange [38]. This perspective emphasizes the role of institutions in value creation, drawing attention to how technology, as an operant resource, actively interacts with other resources to co-create value and innovate services [21]. ...
Small and medium enterprises (SMEs) are vital to the European economy, but sustaining coopetition networks—collaborative arrangements between competitors—remains challenging. In this study, this gap is addressed by developing a reference model and methodology for coopetition networks explicitly designed for SMEs and grounded in the service-dominant (S-D) logic framework. The model provides a structured approach for managing coopetition across the entire network lifecycle, from initiation to dissolution, emphasizing value co-creation and resource integration. A proof of concept (PoC) was implemented in the Portuguese ornamental stone sector to validate the model, revealing significant improvements in manufacturing effectiveness and demonstrating the model’s practical applicability. The results underscore the potential of coopetition networks to boost SMEs’ competitiveness and performance while identifying key trade-offs and risks, such as knowledge sharing and market cannibalization. Although the model addresses critical challenges, in this study, limitations are acknowledged and areas for future research are suggested, particularly in relation to the long-term sustainability of coopetition and the influence of interpersonal dynamics.
... Understanding value from the S-D Logic perspective compels companies to focus on how they can facilitate value creation rather than merely supplying goods or services. In this vein, emergent and integrated technologies such as the Internet of Things (IoT) are seen as catalysts for a new era in which technology profoundly impacts ecosystems [55]. Empirical research highlights the transformative potential of IoT-based innovations in enabling new service offerings (M. ...
... S-D Logic recognizes emerging technologies like the IoT as ushering in a new era where technology profoundly impacts ecosystems [55]. IoT-based innovations foster new service offerings and enable companies to extend their service portfolios to include advanced options such as remote control and predictive maintenance [40]. ...
... On-time delivery is integral to the value co-creation [55], as it aligns with the customer's expectations and needs, contributing to a positive service experience. Reliable delivery enhances trust, a cornerstone of long-term customer relationships and loyalty, essential components of value co-creation in S-D Logic [40]. ...
... S-D Logic provides a holistic, customer-centric approach that emphasizes actor interaction and the ongoing process of value co-creation in today's dynamic and interconnected world [17]. The IoT emerges as a transformative force within this framework, reshaping traditional manufacturing processes and redefining value chains and ecosystems (Stephen L. [68]). This transformation aligns with S-D Logic principles, which focus on value creation within service ecosystems facilitated by actor-generated institutions and arrangements (Stephen L. [71]). ...
... They also ensure that value is co-created in a way that aligns with the goals and expectations of the involved actors (Stephen L. [65]). These institutional frameworks also support the integration of resources-both operant (such as knowledge and skills) and operand (such as physical goods and technology)-which are essential for the co-creation of value (Stephen L. [68]). ...
... Objectives of the Solution: The primary research objective is to create an artefact that enhances the IIoT system by integrating mechanisms designed to promote coopetition within SME networks. This objective is grounded in S-D Logic (Stephen L. [68]), which highlights the importance of value co-creation through resource integration. The goal is to enable the IIoT system to not only bridge gaps in interoperability, usability, and accessibility but also transform how SMEs collaborate and compete. ...
In an era where Information and Communication Technologies (ICT) redefine the boundaries of competition and collaboration, the concept of coopetition — simultaneous competition and cooperation — emerges as a strategic imperative for small and medium-sized enterprises (SMEs). This study presents the design and development of an Industrial Internet of Things (IIoT) artefact designed to enable competition among SMEs. Bringing the Service-Dominant Logic (S-D logic) foundations to IIoT, a Design Science Research (DSR) approach was employed. This approach facilitated the integration of design theory with practical problem-solving, creating the Coopetition IIoT-based System. The primary goal of this solution is to augment the dynamics of coopetition networks, with a particular focus on SMEs. The practical evaluation of the Coopetition IIoT-based System is assessed through a prototype evaluation by experts representing twenty-four manufacturing stone SMEs, a crucial sector in the Portuguese economy. The feedback received was highly positive, indicating a positive evaluation rate of 78.9%. This favourable response highlights the Coopetition IIoT-based System’s proficiency in fostering simultaneous competition and cooperation throughout the lifecycle of business opportunities in SME networks, thereby underscoring its potential as a facilitator of effective competition. Theoretically, this research enriches the application of S-D logic in coopetition networks and advances state-of-the-art IIoT systems. Practically, the Coopetition IIoT-based System demonstrates significant potential in boosting the competitiveness of SMEs in developed economies. Nonetheless, the ultimate efficacy of such IIoT systems will be best determined through real-world application and evaluation. Future research should concentrate on the real-case deployment and assessment of Coopetition IIoT-based Systems within coopetition networks.
... The Service-Dominant Logic (S-D Logic) literature, which shifts the focus from a traditional goods-centric value perspective to a service-oriented approach, emphasizes value co-creation through service exchange among multiple actors within networks [8]. S-D Logic provides a comprehensive lens for examining value co-creation by focusing on dynamic interactions and encompassing a broad spectrum of actors and resources in service ecosystems [9]. ...
... This innovative perspective elevates operant resources-intangible assets like knowledge and skills-above tangible goods, or operand resources, traditionally seen as the primary sources of value. S-D Logic redefines goods as mere facilitators of service delivery, emphasizing the role of specialized competencies in serving others [8,28]. This framework positions service and the co-creation of value it entails as central to economic exchange, thereby challenging earlier, more static views of value [26]. ...
... Within these ecosystems, value propositions serve as the conduits for interactions among actors, moving beyond the notion of fixed value deliveries [32]. This approach distinguishes between value-in-exchange and value-in-use, showcasing the dynamic and processual essence of value creation and realization [8]. The alignment of S-D Logic with foundational theories such as the Resource-Based [33], Competencies Core [34], and Corporate Core Competencies theory [35] underscores its broad applicability and relevance to contemporary discussions on value creation. ...
Coopetition, while offering significant strategic advantages, presents challenges in maintaining long-term collaboration among competitors, often due to a lack of perceived value for the participating actors. This study explores the role of technology in overcoming these challenges by applying the Service-Dominant Logic (S-D Logic) framework to investigate how technology-driven networks can enhance value co-creation among small and medium-sized enterprises (SMEs). The study hypothesizes that transitioning to technology-driven coopetition networks can substantially improve value co-creation. To test this hypothesis, the research critically evaluates existing theoretical approaches to coopetition, identifies gaps in understanding value creation mechanisms, and implements an experimental technology-driven coopetition network leveraging Internet of Things (IoT) technology. The research design is applied explicitly to the Portuguese ornamental stone industry, a significant economic and cultural sector. The findings confirm that technology-driven coopetition networks can enhance value co-creation and improve outputs. These results suggest that integrating technology into coopetition frameworks can provide a viable path to sustaining competitive advantages in SMEs.
... In this study, underpinned by service-dominant (S-D) logic as the overarching theoretical lens, we recognize that the metaverse offers actors, including avatars, AI assistants, and brand communities, a platform through which they may mutually benefit each other in a service-to-service exchange (Hadi et al., 2023;Vargo et al., 2023;Vargo & Lusch, 2008;Yoo et al., 2023). In turn, actors' co-creative engagement and socially rich experiences within the metaverse can help to generate and support a positive CXMV (Gahler et al., 2023;Hadi et al., 2023;Vargo & Lusch, 2008). ...
... The integrative metatheoretical perspective of S-D logic put forward by Vargo et al. (2023) asserts that all service innovation (e.g., metaverse platforms) is emergent, necessitates distributed governance, and is informed and underpinned by symbiotic design. These elements are additionally grounded in the institutional and combinatorial processes of connected actors (i.e., metaverse platform providers, users' avatars, brands with their products and services) integrating resources and co-creating value (Vargo et al., 2023). ...
... The integrative metatheoretical perspective of S-D logic put forward by Vargo et al. (2023) asserts that all service innovation (e.g., metaverse platforms) is emergent, necessitates distributed governance, and is informed and underpinned by symbiotic design. These elements are additionally grounded in the institutional and combinatorial processes of connected actors (i.e., metaverse platform providers, users' avatars, brands with their products and services) integrating resources and co-creating value (Vargo et al., 2023). S-D logic's service orientation thus transcends the divide between both service and product innovation, as well as the divide between physical and digital service innovation, because innovation occurs within social structures and nested sociotechnical systems. ...
The promise of the metaverse as a collective, virtual, and shared social space is revolutionizing digital retail. This study provides groundbreaking insights into customer experience in immersive metaverse environments, as well as into how these experiences on metaverse platforms influence customers' real-world consumption behaviors. Drawing upon data from metaverse platform users in the US, this study identifies the specific antecedents of a positive customer experience on metaverse platforms, including the role of social presence and trialability. Further, it demonstrates the potential for purchase spillovers from the metaverse to traditional retail channels, extending the omnichannel retail literature. In addition, it examines how early-stage versus long-term users of the metaverse shape users' intentions to revisit metaverse platforms. Based on our results, we offer a comprehensive model of customers' metaverse behaviors, which may be used to predict and enhance customers' purchase intentions across channels. Our results also demonstrate that the metaverse is not merely a parallel digital retail channel but instead an influential extension of the customers' real-world consumption. From a managerial perspective, we offer metaverse operators and retail brand managers insights into how an engaging and immersive customer experience in the metaverse can be developed to support metaverse platform growth, and targeted brand strategies that translate into real-world gain for both the brand and the customer. The findings suggest that metaverse platforms must deliver customer experiences at a very high level to prevent stagnation in metaverse usage intentions; therefore, managers can confidently continue investing in relevant strategies to fuel metaverse platform growth.
... Confronting the intricacies of digital coopetition networks requires a novel approach, and service science (Demirkan and Spohrer, 2015), rooted in Service-Dominant (S-D) Logic, emerges as a promising solution (Vargo et al., 2024). This transdisciplinary field, focusing on service systems as its primary object of study, champions the cocreation of value across service ecosystems (Hartmann et al., 2018). ...
... Advanced technologies such as artificial intelligence and machine learning systems can now perform tasks autonomously, interacting directly with customers and other stakeholders without human intervention (Silva et al., 2024). This shift necessitates a service blueprint that accurately represents these autonomous interactions and their implications for service delivery and value co-creation (Vargo et al., 2024). In this regard, while the foundational principles of the service blueprint articulated by Kingman-Brundage remain relevant, there is a critical need for its evolution. ...
This study adapts traditional service blueprint methodologies for technology-driven coopetition networks, where companies simultaneously collaborate and compete. Integrating insights from service science, we developed an enhanced service blueprint framework with three key components: the cyber frontstage Lane for digital interactions, the physical backstage Lane for physical operations, and the support stage lane for supporting processes. Empirical validation in the Portuguese stone sector demonstrated the framework’s effectiveness in identifying network dysfunctions and its ease of use for industry professionals. Feedback highlights its relevance in capturing the complexities of modern digital coopetition and managing interactions and resources. This research underscores the necessity of updating service blueprint methods to optimize service delivery and value co-creation in digitally evolving sectors.
... Adopting the value co-creation perspective of Service-Dominant Logic (S-D Logic) [10], this study aims to develop an IoT artefact that empowers SME coopetition networks, fostering an ecosystem that encourages collaborative innovation and mutual value creation. By utilizing the Design Science Research (DSR) methodology, this research seeks to bridge the theoretical insights of S-D Logic with practical applications in the IIoT, specifically targeting SME coopetition [11]. ...
... According to recent insights from Vargo et al. (2023a), adopting a systems viewpoint allows for conceptualizing markets and marketing phenomena as inherently relational, dynamic, and emergent. From these insights, technology is viewed as a crucial resource for networks, referred to as an increasing enabler of innovation [11], and technological advancements are viewed as enablers for firms' interactions [16], pushing networks to co-create more value for actors [12]. ...
This research addresses the critical gap in enabling effective coopetition networks through technological innovation with the development of Cockpit4.0+, an Industrial Internet of Things (IIoT) artefact tailored for small- and medium-sized enterprises (SMEs). By employing the principles of Service-Dominant Logic (S-D Logic) and leveraging the Design Science Research (DSR) methodology, Cockpit4.0+ represents a pioneering approach to incorporating the IIoT within ecosystems for value co-creation. This facilitates competition and cooperation among firms, enhancing the operational dynamics within SME networks. Evaluated by experts in the ornamental stone sector, a significant sector of the Portuguese economy, the system demonstrated a positive functional acceptance rate of 78.9%. An experimental test was conducted following the positive preliminary functional evaluation of Cockpit4.0+, especially among more digitally advanced companies. The findings revealed that the on-time delivery performance under current best practices (CB.Ps) was 67.1%. In contrast, implementing coopetition network practices (CN.Ps) increased on-time delivery to 77.5%. These positive evaluations of Cockpit4.0+ underscore the practical applicability of S-D Logic and provide fresh insights into the dynamics of coopetition, particularly beneficial for SMEs. Despite its promising results, the real-world efficacy of IIoT systems like Cockpit4.0+ requires further empirical studies to verify these findings. Future research should focus on examining the scalability of Cockpit4.0+ and its adaptability across various sectors and enhancing its cybersecurity measures to ensure its long-term success and broader adoption.
... This paper addresses this research gap by developing and evaluating a reference model and instantiation methodology for coopetition networks specifically designed for SMEs. Grounded in the Service-Dominant (S-D) Logic framework (Stephen L. Vargo & Lusch, 2004), which focuses on 2 reciprocal value propositions and co-creation rather than transactional exchanges (Stephen L. Vargo et al., 2024), the study aims to create a model that enables effective resource exchange and mutual value creation within SME networks. ...
Small and Medium Enterprises (SMEs) play a crucial role in the European economy, yet their ability to sustain coopetition networks—collaborative arrangements between competitors—remains underexplored. This study addresses the gap by developing a reference model and an instantiation methodology for coopetition networks explicitly tailored to the needs of SMEs, grounded in the Service-Dominant (S-D) Logic framework. The reference model provides a structured approach for SMEs to coopetition throughout their entire lifecycle, from initiation to dissolution, focusing on value co-creation and resource exchange. To validate the model, a Proof-of-Concept (PoC) was conducted in the Portuguese ornamental stone sector, demonstrating significant improvements in manufacturing effectiveness and confirming the model’s practical applicability. The findings highlight the potential of coopetition networks to enhance the competitiveness and performance of SMEs. While the reference model successfully addresses key challenges SMEs face, the study acknowledges certain limitations. It suggests areas for further research, particularly regarding the long-term sustainability of these networks and the role of interpersonal dynamics.
... In the context of digital resources, a considerable volume of valuable data are accrued during the servitization process (Favoretto et al., 2022;Opresnik and Taisch, 2015). These data are instrumental in enhancing products and services, facilitating a seamless integration of the two (Cenamor et al., 2017;Vargo et al., 2024;Vendrell-Herrero et al., 2024). Soto-Acosta and Meroño-Cerdan (2008) highlight that while digital resources are crucial strategic assets for manufacturers, their most effective use is in creating barriers to imitation, thereby offering a competitive edge. ...
Purpose
This article aims to unfold digital servitization by exploring the key resources and resource orchestration (i.e. resource configuration and interaction).
Design/methodology/approach
This article conducted an explorative two-stage research strategy of Chinese servitized manufacturers using a preliminary case study and fuzzy-set Qualitative Comparative Analysis (fsQCA) design. The data collection was conducted between 2016 and 2021.
Findings
This article identifies five key resources – radical, complex technological resources, complementary, specific market resources and digital resources – and their configurations – leveraging market opportunities, leveraging innovation integration and leveraging resource advantages – to facilitate servitization in the digital age. The findings underscore the interaction between technological and market resources as well as the role of digital resources in promoting the servitization journey.
Originality/value
This article contributes to the understanding of servitization in the digital context by examining the key resources and their interactions involved. It builds upon the configurational logic of servitization, expanding the existing framework in the digital context and highlighting the significance of technological and market resource orchestration and interaction in servitization research. Moreover, the paper contributes through its exploratory two-stage approach, going beyond a conceptual understanding of servitization by focusing on both the factors that enable servitization (WHAT) and the configurations that lead to servitization (HOW). Additionally, the article investigates the attributes of resources as lower-level components, addressing the need to explore the micro-level practice of resource realignment. By providing clarity on the configurations of servitization, the paper offers practical guidelines for practitioners on how to effectively utilize resources and benefit from digital servitization.
... The study developed a framework that describes how platform boundary resources (APIs, SDKs, IDE, libraries and open-source licenses) can be used to govern the activities of third-party developers. This is especially important as they promote distributed coordination and control of the platform resources (Ens et al., 2023;Ghazawneh & Henfridsson, 2010;Vargo, Fehrer, Wieland, & Nariswari, 2024). Karhu et al. (2018) emphasize that some digital platform owners utilize open-source licenses to encourage collaboration and innovation, hence, allowing third-party developers to access and modify the platform's core (Heshmatisafa & Sepp€ anen, 2023;Karhu et al., 2018). ...
Purpose
The study aims to embrace the lingering call for more empirical studies that can theorize the role of digital platforms in digital entrepreneurship. Hence, this study seeks to reveal the liminal space entrepreneurial experience of third-party application developers, by investigating how the platform boundary resources promote third-party entrepreneurial actions, as they transition through the disoriented, uncertain and ambiguous processes of digital entrepreneurship development.
Design/methodology/approach
To conduct this investigation, an expert interview qualitative method was used. This approach is a well-established technique in the field of social sciences, which allowed a detailed exploration of the theory of liminality. Liminality refers to the transitional phase that individuals or groups experience when moving from one social or cultural context to another. The expert interview method is appropriate for this study because it involves engaging with knowledgeable individuals who have extensive experience and expertise in the subject area being investigated. Through in-depth and unstructured interviews, the experts were able to provide valuable insights and perspectives about the phenomenon investigated.
Findings
The research findings demonstrate that digital platform boundary resources play a significant role in the behaviour of third-party developers’ who engage in the development of digital entrepreneurship in today’s market. The study highlights three ways that show how these resources (software development kit (SDK), API, integrated development environment (IDE), libraries, frameworks) enable third-party developers to create new applications that are used to pursue entrepreneurship in a digital platform, leading to increased user engagement and revenue generation.
Originality/value
The research addresses the critical roles of digital platform boundary resources in digital entrepreneurship development processes. Also, using liminality theory, the research explicated the core experiences of third-party developers as they navigated the challenges and ambiguities experienced in the pursuit of entrepreneurship. Thus, contributing to the existing body of knowledge in literature and practice.
In the era of rapid globalization and digital transformation, small and medium-sized enterprises (SMEs) in the manufacturing sector encounter significant challenges in scaling operations, enhancing operational efficiency, and fostering innovation. This study focuses on manufacturing SMEs, where coopetition– a strategic blend of competition and cooperation– addresses these challenges. Despite its potential to drive innovation and value creation, coopetition networks often struggle to succeed, particularly under the pressures of advancing technology and the need for digital collaboration. To address these issues, this research develops a comprehensive framework that integrates Service-Dominant (S-D) Logic with technology-enabled coopetition networks. Utilizing the Design Science methodology, the study presents a framework that underscores the crucial role of technology in fostering value co-creation within SME networks. This framework is designed to enable sustainable and effective engagement in coopetition, significantly mitigating the risk of network failure by aligning technological innovation with coopetition principles. The proposed framework was evaluated through a targeted survey of managers from SMEs in the Portuguese stone manufacturing sector. The survey results con firmed the practical applicability and potential to promote robust and sustainable coopetition strategies. By integrating theoretical insights with practical applications, this research offers a roadmap for SMEs to effectively manage the complexities of coopetition within the digital supply chain environment.
Increasingly, digital platforms connect suppliers, customers, and other ecosystem parties, facilitating the introduction of various Platform-as-a-Service (PaaS) offerings. This study examines the co-evolution of actor engagement (AE), reflecting actors’ dispositions to invest resources in interactions, and value co-creation (VCC), demonstrated through reciprocal resource integration. The focus is on PaaS initiatives in the asset management industry. Using a comparative case study approach, we analyze two fintech-generated PaaS offerings: a freemium model and a subscription-based model. Our findings reveal distinct pathways for platform development and scaling, driven by the interplay between AE and VCC. The freemium model fosters a “viral” community-building path, where early VCC serves as the engine for AE-VCC co-evolution. Conversely, the subscription model follows a “controlled” ecosystem-building path, with AE driving the process. We observe a gradual involvement of additional ecosystem partners, leading to upgraded solutions, expanded PaaS offerings, and platform upscaling. We identify key factors influencing these dynamics, including business model characteristics, actor roles, and feedback loops. Our study contributes to the literature on digital servitization and platform ecosystems by highlighting the importance of integrating AE and VCC practices to enhance platform utilization and scalability. We propose a framework and research propositions to guide future studies on PaaS development in complex, institutionalized industries. These insights also provide implications for managers aiming to implement effective PaaS strategies and foster innovation in the financial services sector.
Purpose
The research aims to explore the dynamic relationship between digital service innovation (DSI), artificial intelligence (AI) and business performance (BPer) in service-based models with a focus on how AI-enhanced insights from service use and customer feedback can strengthen business strategies. The aims are to show that DSI and AI are key to driving growth and efficiency in the digital economy and to underscore AI’s role in utilizing contextual data to improve decision-making and business outcomes.
Design/methodology/approach
The study uses general structural equation modeling to analyze Spanish manufacturing firms, focusing on medium-sized enterprises and including both business-to-business and business-to-consumer orientations. Data are drawn from the Iberian Balance Analysis System [Sistema de Análisis de Balances Ibéricos (SABI)] database, complemented by a Qualtrics survey to assess the integration of AI in decision-making processes. The methodology is designed to evaluate the interplay between DSI, AI and BPer, with the aim of identifying actionable insights for service-based business orientations.
Findings
The study clarifies the relationships between DSI, AI and BPer, providing new theoretical and empirical insights. The findings confirm DSI's direct positive impact on performance and suggest AI’s nuanced mediating role, emphasizing the need for strategic DSI-AI integration in manufacturing firms for enhanced performance.
Research limitations/implications
The research explains the synergistic bond between DSI and AI in boosting BPer and discovering how by-product data can be transformed into strategic insights.
Practical implications
This study advises manufacturing sector leaders to integrate DSI and AI for enhanced performance and competitive advantage, emphasizing the value of high-quality, contextual data for AI learning and decision-making.
Originality/value
Researchers will observe that the study confirms the positive impact of DSI on BPer, while also highlighting the significant role of AI in enhancing this effect.
For manufacturing firms, success in innovating IT-enabled services is a critical antecedent to benefiting from the digital servitization of their business models. Digital servitization literature has explored mechanisms for success in innovating IT-enabled services, indicating that the phenomenon is multifaceted and needs to be explained from multiple theoretical perspectives. We derive a conceptual model for success in innovating IT-enabled services covering its multifaceted nature by referring to knowledge-based and organizational control theory. We test this model using qualitative cases of IT-enabled service innovation initiatives in manufacturing firms and use set-theoretic analyses to account for the multifaceted nature of the phenomenon. The necessary condition analysis yields that a certain degree of service innovation capabilities is a prerequisite for success. With the results of a qualitative comparative analysis, we obtain five solution terms as causal recipes for success in innovating IT-enabled services. Our results contribute to research by offering a theory-based approach that explains the multiplicity of success in IT-enabled service innovation. Practitioners benefit from our results by understanding prerequisites and causal recipes for success while learning from unsuccessful initiatives in innovating IT-enabled services of manufacturing firms. Our study is also an example of how to rigorously calibrate qualitative data using a structured approach.
In our rapidly globalizing and digitizing world, small and medium-sized manufacturing enterprises (SMEs) face significant challenges that compel them to adopt a co-opetition strategy—a blend of competition and collaboration. Despite their potential benefits, the high failure rates and unmet expectations of co-opetition networks highlight a significant gap in the empirical frameworks for establishing and maintaining these networks. This research seeks to address these gaps by developing a framework that enhances value cocreation in the Portuguese ornamental stone sector, integrating the latest developments in the Industrial Internet of Things (IIoT), Service-Dominant Logic (S-D Logic), and service science. Question: How can a framework integrating IIoT, S-D Logic, and service science enhance value cocreation and manage co-opetition among SMEs in the Portuguese ornamental stone sector? Methods: Theoretical insights and practical applications were synthesized to develop and validate a comprehensive co-opetition framework. This framework was tested through an experimental pilot project in the Portuguese ornamental stone sector, leveraging IIoT. Results: The implementation of the framework demonstrated significant operational efficiency, including enhanced performance, reduced production variance, and better resource utilization, indicating that integrating IIoT within co-opetition networks can effectively support SMEs. Conclusions: This study confirms the transformative impact of embedding IIoT in co-opetition networks, offering a replicable and scalable framework for other sectors. This framework addresses the empirical gap and aligns with broader socio-economic goals, setting the stage for further research into its applicability and potential across diverse industrial environments.
Purpose
This paper presents a new conceptualization of digital service anchored in a coconstitutive ontology of digital “x” phenomena, illuminating the pivotal role of the digital qualifier in the service context. Our objective is to provide a theoretically grounded conceptualization of digital service and its impact on the nature of the value cocreation process that characterizes digital phenomena.
Design/methodology/approach
Drawing from scholarly works on digital phenomena and fundamental principles of service-dominant logic, this paper delineates the essence of digital service based on the interplay between digitization and digitalization as well as the operational dynamics of generativity and its constitutive dimensions (architecture, community, governance).
Findings
The paper defines digital service as a sociotechnical process of value cocreation, where participants dynamically architect, govern and leverage digital resources. This perspective highlights the organic development of digital service and the prevalence of decentralized control mechanisms. It also underscores how the intersection between generativity’s dimensions—architecture, community and governance—shapes the dynamic evolution and outcomes of digital services.
Originality/value
Our conceptual framework sheds light on our understanding of digital service, offering a foundation to further explore its nature and implications for research and practice, which we illustrate using the case of ChatGPT.
Real-time multisensory social interactions (RMSIs) between people are at the center of the metaverse, a new computer-mediated environment consisting of virtual “worlds” in which people act and communicate with each other in real-time via avatars. This research investigates whether RMSIs in the metaverse, when accessed through virtual-reality headsets, can generate more value for interactants in terms of interaction outcomes (interaction performance, evaluation, and emotional responses) than those on the two-dimensional (2D) internet (e.g., Zoom meetings). We combine theoretical logic with extensive field-experimental probes (which support the value-creation potential of the virtual-reality metaverse, but contradict its general superiority) to develop and refine a framework of how RMSIs in the metaverse versus on the 2D internet affect interaction outcomes through interactants’ intermediate conditions. The refined framework serves as foundation for a research roadmap on RMSIs in the metaverse, in which we highlight the critical roles of specific mediating and moderating forces along with interactional formats for future investigations of the metaverse and also name key business areas and societal challenges that deserve scholarly attention.
Our understandings of money, possessions, and ownership are all changing dramatically as consumption becomes digital and virtual. The Metaverse is an imagined future space where these building blocks of neoliberal production and consumption are delinked. We examine these changes through the affordances of cryptocurrencies, algorithmic collectibles, and NFTs. We seek to disambiguate these efforts at disintermediation through online auctions and speculation. We present practical implications for artists, art institutions, buyers, and investors. We theorize new forms of ownership with fractional ownership and fractionalized property rights. And we seek to understand why some consumers pay astronomical prices for digital art that includes simple and often silly artwork with limited property rights. To do so we distinguish alternate, but sometimes overlapping, buyer motivations in the wild world of crypto art as we purportedly move toward the Metaverse.
Servitization increasingly requires the use of digital technologies such as the Internet of Things (IoT), cloud computing, and predictive analytics. This paper investigates digital service innovations (DSIs) that use these technologies. Using a service innovation lens, it is distinguished from most prior servitization research through specifying DSIs from incremental to radical modes, rather than measuring service innovation on self-reported scales. Data were collected using expert interviews and secondary sources from 20 manufacturers from four sectors. Using changes from baseline service offerings, the study identified nine DSIs with varying degrees of innovativeness. The paper develops a framework within which each DSI can be placed, with two axes representing innovation mode (incremental, intermediate, radical) and impact of innovation (customer, manufacturer, hybrid). This latter dimension addresses concerns about the lack of focus on customer value in prior service innovation research. The study also develops a new typology of DSI groupings (Business enabler, Service enhancement, Digital service offering) demonstrating that DSIs have mainly enabling or service enhancing roles for manufacturers rather than one that is predominantly designed to create digital service offerings. The exceptions are ‘predictive maintenance’ and ‘process improvement’, which are radical/intermediate DSIs respectively and provide strong value for both manufacturers and customers.
Many core marketing concepts (e.g., markets, relationships, customer experience, brand meaning, value) concern phenomena that are difficult to understand using linear and dyadic approaches, because they are emergent. That is, they arise, often unpredictably, from interactions within complex and dynamic contexts. This paper contributes to the marketing discipline through an explication of the concept of emergence as it applies to marketing theory. We accomplish this by first drawing on the existing literature on emergence in philosophy, sociology, and the theory of complex adaptive systems, and then link and extend this understanding to marketing using the theoretical framework of service-dominant (S-D) logic, particularly as enhanced by its service-ecosystems and institutionalization perspectives. Our work recognizes both emergence and institutionalization as integral or interrelated processes in the creation, maintenance, and disruption of markets and marketing phenomena. We conclude by discussing implications for marketing research and practice.
Macromarketing is often contrasted with micro-views of dyadic relationships, such as firm/customer interactions and transactional exchange. However, developing solutions for “wicked” social problems that are often viewed through a macro lens requires an approach that considers multiple perspectives at aggregated levels of interaction. We propose a framework for bridging the micro-macro divide by applying a metatheoretical lens, based on service-dominant logic and its service-ecosystems view. This approach highlights the importance of studying value cocreation practices as a microfoundation of macrostructures and highlights the need for studying institutions and institutional arrangements at varying levels of granularity. We argue for consideration of a meso-level, which is conceptually nested between micro-actions and macro-structures and allows researchers to investigate the emergence of markets as institutionalized, and potentially sustainable solutions. Exploring multiple levels of interaction can aid researchers and practitioners in understanding the complexity of wicked problems and cocreating solutions for major societal challenges faced in the world today.
Plain English Summary
Some years, like some poets and politicians, are singled out for fame far beyond the common lot and 1971 was clearly such a year. One of the events of 1971 was the inventions of the microprocessor, a computer on a chip. This invention led to the creation of the personal computer, the internet, the smart phone, and cloud computing. Over the past 50 years, economic activities have been reorganized from large bureaucratic firms to a more networked form of organization for creating value for consumers and making money for companies. To further our understanding of this digital revolution, we provide a framework consisting of three interrelated concepts: digital technology infrastructure, multi-sided digital platforms, and platform-based ecosystems. Using a unique database over five decades, we test the hypothesis that new firms were needed to introduce digital technologies. Countries that did not promote new firms fell behind in adopting the new technologies.
Digital technologies are radically changing how established organizations design novel services. Digital transformation (DT) strategies are executed to manage the transition from product-centric to service-centric business models based on digital technologies. However, little is known about what configurations of DT strategies lead to successful digital service innovation (DSI) in established organizations. We employ fuzzy-set Qualitative Comparative Analysis on a set of 17 case studies of DT strategies from established organizations with different industry backgrounds. We identify several distinct configurations of DT strategies that lead to successful and unsuccessful DSI. Based on these configurations, we deduce that the threat of digital disruption negatively impacts an organization’s innovation activities. Furthermore, we find that strategic partnerships can be leveraged by organizations that face an imminent threat of digital disruption while organizations with competitive advantages may rely on “do-it-yourself” approaches. Lastly, we find that the involvement of a C-level executive is a necessary requirement for successful DSI. Our results contribute to theory by integrating research on DSI and DT, providing a perspective on DSI failure, and employing a configurational research approach that allows us to highlight interdependencies between factors as well as insights into the individual factors. Furthermore, we provide actionable recommendations for executives.
While service design has been highlighted as a promising approach for driving innovation, there are often struggles in realizing lasting change in practice. The issues with long-term implementation reveal a reductionist view of service design that ignores the institutional arrangements and other interdependencies that influence design efforts within multi-actor service systems. The purpose of this article is to build a systemic understanding of service design to inform actors' efforts aimed at intentional, long-term change in service systems. To achieve this aim, we inform the conceptual building blocks of service design by applying service-dominant logic's service ecosystems perspective. Through this process, we develop four core propositions and a multi-level process model of service ecosystem design. The conceptualization of service ecosystem design advances service design theory by illuminating previously taken for granted aspects; explaining how intentional, long-term change emerges; and expanding the scope of service design beyond projects. Furthermore, this research offers a foundation for future research on service design that involves extending the systemic conceptualization of service design, conducting more holistic empirical investigations, and developing practical methods and approaches for the embedded, collective processes of designing.
In this paper, we explore how manufacturing firms and their customers co-create digital service innovations in an attempt to address the digitalization paradox. We present empirical insights from a case study of four manufacturers and their customer relationships. The results suggest that value co-creation in digital servitization is best managed through an agile micro-service innovation approach. Such an approach requires incremental micro-service investments, sprint-based micro-service development, and micro-service learning by doing to ensure customized and scalable digital service offerings. The proposed agile co-creation model provides insight into the phases, activities, and organizational principles of a micro-service innovation approach. Relational teams that pool knowledge from providers’ and customers’ strategic, technological, and operational areas are crucial to ensure successful cooperation and governance for agile co-creation. This paper offers insight into how companies engage in agile co-creation processes, with important recommendations for innovation in manufacturing firms in the era of digitalization.
Over the past decade, the rise of blockchain technology has led to the emergence of a growing number of decentralized platforms that are governed less by platform owners and more through community efforts. The emergence of blockchain platforms offers a unique opportunity to examine alternative structures for platform governance and to develop a theory around the value of centralized, semi-decentralized, and decentralized governance. Drawing on mechanism design theory, we evaluate the tradeoffs between centralization and decentralization and hypothesize semi-decentralization as a higher-performing governance structure. Empirical evidence from the blockchain industry shows that decentralization has an inverted U-shaped relationship with platforms' market capitalization, developer attention, and development activity. We further examine factors driving the decentralization of platform governance and find that digital platforms of the infrastructure layer--relative to those of the application layer--have a tendency to become more decentralized. This tendency, nevertheless, can be offset by experienced leaders to achieve semi-decentralization. Overall, this study contributes new insights on the characteristics, antecedents, and consequences of effective platform governance.
This paper examines the development of service innovation as a research field since the publication of Richard Barras’ seminal paper ‘Towards a Theory of Innovation in Services’ in 1986. It presents an exhaustive literature review of 31 years of research on service innovation. It offers some cross-sectorial perspectives on twelve key themes emerging from the literature, and on the broader research landscape and trajectories. Researchers, technologists and policy makers in the field of service innovation face issues arising from theories borrowed from economics since the 1980s and evolving through operationalization of its core themes over the last 20 years. After a description of the field, theoretical underpinnings of the field drawn from organization and management theory are discussed. The field has reached a stage where it can provide theoretical knowledge beyond the scope of the original service innovation theory, such as social innovations. A research agenda is suggested in both theoretical and thematic perspectives.
Human culture has recognized the damage being caused to our environment and is in the process of transitioning toward sustainable systems. Design disciplines and environmental studies are engaging in alternative ways to support a sustainable world and, to a large extent, on resolving the disconnection between humans and nature. The conceptualization of Symbiotic Design proposed in this research, facilitates theoretical-practical reflections and recognizes that learning through a closer association with the natural world can trigger innate responses and enhance human creativity. Designers need to have an understanding of these concepts to allow them to design in an ecologically conscious way.
Using biophilia, biomimicry and resilience thinking as core eco-techniques, the research develops a series of teaching/learning practices that aim to enhance the embodiment of design with-in nature. This Symbiotic Design Practice process was developed, tested and evaluated across a sample of undergraduate and postgraduate design students. Text, visuals and workshop activities evolved through a method of action-based cycles. In essence, the research proposes a new eco-pedagogical strategy that facilitates nature-based experiences and behaviour change toward an ecologically conscious design culture.
Service innovations challenge existing offerings and business models, shape existing markets, and create new ones. Over the last decade, service research has shown increasing interest in the concept of innovation and should by now have reached maturity and created a strong theoretical basis. However, there is no coherent theoretical framework that captures all the facets of service innovation, and to move service innovation research forward, we must revisit the key assumptions of what an innovation is. To enable this, the present article addresses three fundamental questions about service innovation: (1) What is it and what is it not? (2) What do we know and what do we not know? and (3) What do we need to know to advance service research? By doing so, this article offers an updated and comprehensive definition of service innovation and provides a research agenda to suggest a path forward.
While social and circular business models (CBMs) are viewed as important devices to improve humanity’s wellbeing, their adoption rates have been somewhat disappointing. The CBM literature often contributes these low adoption rates to innovation failures of firms and redirects social and circular business models toward a stronger profit-orientation. Much of this work is grounded in a Porterian value chain logic that, arguably, overemphasizes economic goals at the expense of social and sustainability goals. In contrast, this study promotes an institutional perspective that shows that all business practices are part of larger societal and ecological systems, so that a real transition toward sustainability demands joint institutional alignment processes which balance the adaptive tensions between social mission, environmental stewardship and economic growth. We systematically develop five fundamental propositions for a new, institutional CBM framework and, based on these fundamental propositions, discuss an agenda for future research.
This study focuses on the use of big data analytics in managing B2B customer relationships and examines the effects of big data analytics on customer relationship performance and sales growth using a multi-industry dataset from 417 B2B firms. The study also examines whether analytics culture within a firm moderates these effects. The study finds that the use of customer big data significantly fosters sales growth (i.e. monetary performance outcomes) and enhances the customer relationship performance (non-monetary performance outcomes). However, the latter effect is stronger for firms which have an analytics culture which supports marketing analytics, whereas the former effect remains unchanged regardless of the analytics culture. The study empirically confirms that customer big data analytics improves customer relationship performance and sales growth in B2B firms.
This article introduces the trajectory touchpoint technique (TTT), a service design methodology that harnesses customer experiences for enriched understanding of value throughout multilevel service components to ultimately increase innovativeness. We detail the design and development of the TTT using design science research, a goal-oriented methodology that produces robust and practical solutions to organizational problems. We demonstrate the TTT’s practical utility through collaborations with different organizations (n = 9) and diverse service users (n = 240). We show how the TTT is an easy to use methodology that enhances understanding of value creation and illustrate its benefits with concrete examples of innovations to service encounters, the service system, and the value constellation. We reveal how a service design methodology can be the bridge between the theoretical standpoint of S-D logic’s perspective on value cocreation and the practical tools and techniques required to operationalize it.
The last decade has seen the emergence of the sharing economy as well as the rise of a diverse array of research on this topic both inside and outside the marketing discipline. However, the sharing economy’s implications for marketing thought and practice remain unclear. This article defines the sharing economy as a technologically enabled scoioeconomic system with five key characteristics (i.e., temporary access, transfer of economic value, platform mediation, expanded consumer role, and crowdsourced supply). It also examines the sharing economy’s impact on marketing’s traditional beliefs and practices in terms of how it challenges three key foundations of marketing: institutions (e.g., consumers, firms and channels, regulators), processes (e.g., innovation, branding, customer experience, value appropriation), and value creation (e.g., value for consumers, value for firms, value for society) and offers future research directions designed to push the boundaries of marketing thought. The article concludes with a set of forward-looking guideposts that highlight the implications of the sharing economy’s paradoxes, maturation, and technological development for marketing research. Collectively, this article aims to help marketing scholars not only keep pace with the sharing economy but also shape its future direction.
The present study intends to extend the discussion about digital servitization business models from the perspective of the theory of the firm. We utilize four theories of the firm, the Industrial Organization (IO), Resource-Based View (RBV), Organizational Identity (OI), and Transaction Cost Approach (TCA) to understand digital servitization business models of firms in the context of ecosystems. Digitalization transforms solution providers' business models, and shapes their firm boundary decisions, as solution providers develop digital solutions across organizational boundaries within ecosystems such as harbours, mines, or airports. Hence, digitalization does not only impact on individual firms' business models, but requires that the business models of different firms within their ecosystems provide some form of fit or alignment. Hence, business models in digital servitization should be considered from the ecosystem perspective. Based on the literature review, we provide future research suggestions for digital servitization business models in ecosystems.
The ability of manufacturing companies to offer advanced services and achieve superior financial performance remains an open question in the servitization literature. One central question relates to how providers govern customer relationships to realize profits through servitization. This study addresses this question by unraveling the complex relations between advanced service provision, relational governance strategies, and the financial performance of manufacturing firms. Drawing on a dataset of 50 Swedish advanced service providers, this study uses a configurational comparative method—namely, fuzzy-set qualitative comparative analysis (fsQCA)—to identify the influence of configurations of governance conditions (i.e., service innovation, perceived switching costs, the attractiveness of alternatives, and explicit contracts) on firm performance. This study contributes through the identification of three alternative governance strategies that enable advanced service providers to benefit from service provision: 1) innovation governance strategy (high service innovation, low attractiveness of alternatives, and low use of explicit contracts); 2) relational governance strategy (high service innovation, high perceived switching costs, and low use of explicit contracts); and 3) market-based governance strategy (high service innovation, low perceived switching costs, high attractiveness of alternatives, and high use of explicit contracts). These results enrich the literature on servitization and advanced services by reflecting the need to apply diverse relational governance strategies. The results suggest multiple paths to superior financial performance.
Value is generated through the whole service innovation process in a complex collaborative networked ecosystem. This study aims to enhance understanding of value generation in digital service innovation process with an emphasis on information technology by developing an extended value generation process framework and evaluating on how it is applicable in a real-life networked retail service innovation context. The findings of the study suggest that multiple information technology (IT), process and business related factors affect value creation during the digital service innovation process. The role of information technology is multifaceted, providing both new opportunities and challenges in the service innovation context. The extended framework for exploring the service innovation process provides a more structured way to examine the complex, networked, service innovation ecosystems.
Moving beyond value creation in individual companies, firms have integrated customers, partners, and stakeholders in a mutual value co-creation process. Examples are platforms such as Apple’s App Store, where external developers use boundary resources provided on the platform to develop and share applications in an ecosystem. While value co-creation on business-to-consumer platforms is common practice, research on their business-to-business (B2B) counterparts is still sparse. The goal of this paper is to analyze how B2B platforms utilize value co-creation practices. We conduct a multiple case study in the context of emerging Internet of things (IoT) platforms highlighting that B2B platforms follow three standardized value co-creation practices. The platform encourages the supply side through the (1) integration of complementary assets, the demand-side through (2) ensuring platform readiness and connects both processes by (3) servitization through application enablement. We conclude by showing how platforms leverage different boundary resources in a process of standardization to develop a scalable infrastructure that explains how platforms enable value co-creation within their ecosystem.
This article compares problems and strategies cited in the services marketing literature with those reported by actual service suppliers in a study conducted by the authors. Discussion centers on several broad themes that emerge from this comparison and on guidelines for future work in services marketing.
To advance the study of innovation in complex settings, this study integrates the innovation, institutional theory, philosophy, and service-dominant logic literatures. Exploring the emergence of innovation and service ecosystem dynamics, researchers take an abductive approach anchored in over 4 years of case study data regarding a high technology solution in an Internet-of-Things setting. By framing innovation as a systemic process, the study reveals that (1) institutional reconciliation is an overlooked phase of innovation, (2) ideas are refined by four types of institutional reconciliation pressures (tensions, divergences, expected value, and service), and (3) innovation is influenced by plasticity in four ways (recursivity, temporality, complementarity, and continuity). Based on these findings, the authors outline a research agenda regarding four principles of innovation as a systemic process. The findings suggest that managers should nurture norms, rules, and beliefs through a systemic process that facilitates the emergence of innovation.
Purpose
The collaborative economy (CE), and within it, collaborative consumption (CC) has become a central element of the global economy and has substantially disrupted service markets (e.g. accommodation and individual transportation). The purpose of this paper is to explore the trends and develop future scenarios for market structures in the CE. This allows service providers and public policy makers to better prepare for potential future disruption.
Design/methodology/approach
Thought experiments – theoretically grounded in population ecology (PE) – are used to extrapolate future scenarios beyond the boundaries of existing observations.
Findings
The patterns suggested by PE forecast developmental trajectories of CE leading to one of the following three future scenarios of market structures: the centrally orchestrated CE, the social bubbles CE, and the decentralized autonomous CE.
Research limitations/implications
The purpose of this research was to create CE future scenarios in 2050 to stretch one’s consideration of possible futures. What unfolds in the next decade and beyond could be similar, a variation of or entirely different than those described.
Social implications
Public policy makers need to consider how regulations – often designed for a time when existing technologies were inconceivable – can remain relevant for the developing CE. This research reveals challenges including distribution of power, insularity, and social compensation mechanisms that need consideration across states and national borders.
Originality/value
This research tests the robustness of assumptions used today for significant, plausible market changes in the future. It provides considerable value in exploring challenges for public policy given the broad societal, economic, and political implications of the present market predictions.
Recent development and implementation of advanced information and communication technologies (ICT) (e.g. Internet-of-Things (IoT), Cyber-Physical System (CPS)) has triggered a promising market of smart, connected product (SCP), and hence, enabled the prevailing tendency of manufacturing value proposition towards a service-oriented manner, viz. Smart product-service systems (PSS). Smart PSS, as a unique type of PSS, aims to achieve individual customer satisfaction with less environment impact by utilizing SCP as the media and tool, to generate various e-services as a bundle. Its service innovation is enabled by a platform-based approach and generated in a data-driven manner. Moreover, the digitalization of users, things, manufacturers and service providers in the cloud-based environment also provides potential service innovation opportunities. Nevertheless, only few existing works discuss about the Smart PSS, let alone an effective manner with valid cases to support its service innovation. Aiming to fill this gap, this research provides a novel definition of Smart PSS, and proposes a systematic design framework for its service innovation with an elaborated case study of a personalized smart wearable. Meanwhile, other potential industrial applications are discussed as well to offer valuable insights to manufacturers in their servitization for value creation.
Purpose
The extant service ecosystem literature rarely addresses the dark side of actors’ agency, which hinders further development of the service-dominant (S-D) logic, particularly with regard to understanding service ecosystem dynamics. Therefore, the purpose of this paper is to delineate the dark-side facets of actors’ agency that adversely affect actor-to-actor relationships and resource integration, in the context of shaping service ecosystems.
Design/methodology/approach
With abductive reasoning, this study seeks to reorient results from prior literature in accordance with empirical findings. The empirical data pertain to 21 firms in Finland, New Zealand, Singapore and Sweden, representing various industries, sizes, international reach, technologies, ownership forms and histories.
Findings
The dark side of agency emerges as an actor’s deliberate attempts to influence a service ecosystem to achieve self-interested benefits, despite understanding that these actions inhibit other actors from providing service and can be detrimental to other actors and the ecosystem. The findings also reveal three facets of the dark side: conflict, ambiguity and opportunism. The process of shaping service ecosystems is prone to systematic conflict, ambiguous and opportunistic behaviours occurring between the focal actors’ ecosystem and other ecosystems vying for the same set of resources.
Research limitations/implications
This study advances the S-D logic by addressing the crucial role of agency in a dialectical relationship with institutions and structures. Service-for-service exchanges can take place in asymmetric, ambiguous, opportunistic situations driven by self-interested motives.
Practical implications
Processes aimed at shaping service ecosystems can demonstrate the dark sides of actors’ agency, related to conflict, ambiguity or opportunism. Managers interested in shaping strategies should be prepared for this outcome.
Social implications
A service ecosystem perspective requires policy makers and regulators to reconsider their role in shaping processes. No “invisible hand” guides markets to equilibrium, so they should be more proactive in shaping ecosystems, rather than merely fixing market failures.
Originality/value
This research offers the first S-D logic-based investigation into the dark side of actors’ agency in shaping service ecosystems.
Background. The use of simulation games for complex systems analysis and design has been acknowledged about 50 years ago. However, articles do not combine all salient factors for successful simulation games, and often stem from a clear view of one particular field of science only. With combining multiple disciplines, connect analysis and design as well as research and practice, we provide deep insights in design and use of simulation games.
Aim. This article analyzes the design and evaluation process of a variety of game-based projects and activities, using existing scientific concepts and approaches, in order to establish games as a valid research tool. Our focus lies on the approach towards the use of games as design instrument; using them as an intervention in a larger, complex context, in order to design this context. With our contribution, we aim at providing insights and recommendations on the design and use of games as valid research tools, the limitations of this use, possible pitfalls, but also best practices.
Method. We carried out a literature review of related work to identify the most important scientific concepts related to our approach of game design. Further use of combined quantitative and qualitative case study analyses highlights the design process and results of our own game studies.
Results. The analyses yielded a consolidated conceptualization of simulation games as research instruments in complex systems analysis and design. The results also include methods for the evaluation of simulation games, additional evaluation methods, and limitations to use simulation games as research instruments.
Conclusions. We propose guidelines for using simulation games as research instruments that may be of value to practitioners and scientists alike.
Recommendation. We recommend practitioners and scientists to apply the guidelines presented here in their efforts to analyze and design complex systems.
Purpose
There is a need to understand value co-creation in service ecosystems that engage multiple actors with different goals. This study aims to extend the understanding of value co-creation by considering the orchestration of service ecosystems with reference to resource-integration processes.
Design/methodology/approach
An exploratory case study approach is used to analyze actors' roles in resource orchestration within a service ecosystem, gathering data from the macro, meso and micro levels of an Italian hospitality and tourism services ecosystem.
Findings
A framework is devised that highlights the intersection between orchestration and resource integration for value co-creation processes across the macro, meso and micro levels in service ecosystems. This extends the understanding of service ecosystem dynamics, especially how new value co-creation structures emerge, by emphasizing the circular causality between system levels. Findings show how orchestrating resource integration activities initiate and institutionalize non-linear value co-creation processes.
Practical implications
Resource integration orchestration within and between ecosystem levels is a possible response to societal challenges and for creating economic, cultural and social value across the community. The study offers policymakers insights into developing new competencies for developing actions according to a logic of socially and sustainable value.
Originality/value
This study advances the understanding of service orchestration by expanding the concept and the feasibility of service ecosystem orchestration. It offers insights into the importance of orchestrating resource integration to the emergence and vitality of service ecosystems themselves. The study responds to the need for empirical studies on value co-creation.
Purpose
Existing innovation frameworks suggest that manufacturing firms have traditionally developed a complementary model of technological innovations comprising process and product innovations (e.g. Oslo Manual). This article presents digital service innovation as a novel form of technological innovation that is capable of enhancing the performance of firms in certain manufacturing industries.
Design/methodology/approach
Drawing on technological innovation and digital servitization fields of research, this study argues that digital service innovation, in manufacturing contexts, complements traditional sources of technological innovation, so increasing the profit margins of firms. This effect is significant in industries characterized by business-to-business contexts, high presence of link channels and long product life spans (e.g. manufacturing and computer-based industries). Predictions are tested on a unique sample of 423 Spanish manufacturing firms using parametric ( t -test) and nonparametric (fuzzy-set qualitative comparative analysis, fsQCA) approaches.
Findings
The results of this analysis show that a necessary condition so that manufacturing firms can increase profits is the deployment of simultaneous process and product innovations. It also reveals that optimal configuration requires that digital service innovation be undertaken, particularly in machinery and computer-based manufacturing industries. Hence, all three sources of technological innovation are brought together in order to reach the highest levels of company performance. The evidence suggests that technological innovation and digital servitization are closely interrelated in highly innovative manufacturing contexts.
Originality/value
This study's originality and value reside in the fact that it reveals the existence of firms incorporating digital service innovation – a new, technological innovation dimension that challenges existing innovation frameworks – to complement traditional technological innovation sources, namely process and product innovation. Moreover, the study conceptualizes and empirically tests the value-adding role of digital services in firms' technological innovation portfolio.
While the digital platforms literature has evolved rapidly, previous studies assumed platforms are the fundamental infrastructures. However, this neglects the temporal components of ecosystems and the role of platform complementors in developing digital platforms. By conceptualizing digital platform-based ecosystems as layered modular architectures and drawing on transaction cost theory and network effects, this study explores how platform complementors develop cross-border business-to-business (B2B) digital platform-based ecosystems. This study uses multiple longitudinal case studies and modular process analysis by exploring New Zealand B2B mobile payment agencies’ role in developing digital platform-based ecosystems. It reveals that digital platform-based ecosystems’ development is non-linear but structurally predictable. We further develop a process model to visualize the cross-border digital payment ecosystems’ temporal and modular process. The findings demonstrate that the modular patterns of digital platform-based ecosystems led by the complementors attribute to complementors’ transaction costs and the network effects.
The emerging digital context for international business along with rising deglobalization forces have accentuated multinational enterprises’ organizing challenges, particularly with regard to managing relationships with global platform and ecosystem partners. We propose that the loose coupling perspective, which suggests the coexistence of coupling (linkages) to maintain responsiveness and looseness (separateness) to retain distinctiveness, can provide valuable insights on addressing such external governance-related challenges in the context of global platforms and ecosystems. We draw on and integrate ideas from loose coupling theory and digitalization to inform on the key contingencies and mechanisms of MNEs’ external organizing. We show how these insights can be further integrated with other perspectives such as new internalization theory to inform combined internal and external governance in digital globalization.
The upsurge of digital innovations around the world has led to the establishment of many digital organizations, mostly small-medium, that focus on digital service innovation. For such organizations, the dominant use of digital technologies significantly shapes the cognition of their executives. But technology shaping of executive cognition is underresearched and, hence, underexplained. This paper seeks to address this limitation through an empirical study informed by critical realism and media ecology theory. The study explains how and why digital technology shapes executive cognition through combined influence of digital platforms and applications, service innovation, and executive functions. This explanation leads to the conceptualization of the executive of the digital organization as a platform. The Platform Executive is characterized by cognitive restructuring in a rapid and innovative manner during engagement with digital technologies. Based on these explanations, the paper discusses the theoretical, research, and practical implications.
Value co-creation for service innovations involves integrating inputs from multiple actors within service ecosystems. Traditionally, value co-creation has been considered in light of business-to-consumer (B2C) interactions. The emergence of digital information platforms allowing consumer-to-consumer (C2C) communications is changing how service ecosystems establish and create value for service innovations. In this paper, we develop a Digital Information Flow Continuum that includes B2C, external provider and consumer co-created (B2C/C2C combined) and C2C digital communications. Using Service-Dominant Logic (SDL), we assess the impact digital information flow elements have on the perceptions and usage likelihood for telemedicine (TM) services. We use structural equation modeling to analyze online survey results from 827 health consumers collected as part of a healthcare organization’s TM launch. The results demonstrate that the Digital Information Flow Continuum impacts the acceptance of the TM innovation directly, and indirectly through value perceptions of comparable service quality relative to alternatives and ease of access to care.
The diffusion of innovation is generally referred to as the spread or adoption of a technology within a social context. This view separates technological and market aspects of innovation by relying on an underlying assumption of a unidirectional flow of innovation–that is, from the technological side to the market side. More recent work, however, points toward more dynamic, inclusive, and integrative approaches to studying innovation and diffusion. We develop a theoretical framework for rethinking the process of diffusion in innovation, using a service-centered, ecosystems, and institutional lens. This framework helps to overcome narrow conceptions that separate technological aspects of innovation from processes of diffusion or adoption, and highlights the importance of institutional change. Specifically, our framework does not privilege one actor as an innovator/producer and another as an adopter/consumer, but rather considers all actors as resource integrators, and diffusion as a critical part of recursive innovation processes.
Herbert Simon's classic work on artificial intelligence in the expanded and updated third edition from 1996, with a new introduction by John E. Laird.
Herbert Simon's classic and influential The Sciences of the Artificial declares definitively that there can be a science not only of natural phenomena but also of what is artificial. Exploring the commonalities of artificial systems, including economic systems, the business firm, artificial intelligence, complex engineering projects, and social plans, Simon argues that designed systems are a valid field of study, and he proposes a science of design. For this third edition, originally published in 1996, Simon added new material that takes into account advances in cognitive psychology and the science of design while confirming and extending the book's basic thesis: that a physical symbol system has the necessary and sufficient means for intelligent action.
Simon won the Nobel Prize for Economics in 1978 for his research into the decision-making process within economic organizations and the Turing Award (considered by some the computer science equivalent to the Nobel) with Allen Newell in 1975 for contributions to artificial intelligence, the psychology of human cognition, and list processing. The Sciences of the Artificial distills the essence of Simon's thought accessibly and coherently. This reissue of the third edition makes a pioneering work available to a new audience.
The paradox of openness is inherent to all platform ecosystems—the tension in enabling maximum openness to create joint innovation while guaranteeing value capturing for all actors. Governance mechanisms to solve this paradox are embedded into the technical architecture of the platform, addressing the dimensions of access, control, and incentives. Blockchain technology offers unique ways to design novel governance mechanisms through the standardization of interactions. However, the design of such an architecture requires careful consideration of the cost associated with it.
The emergence of novel and powerful digital technologies, digital platforms and digital infrastructures has transformed innovation and entrepreneurship in significant ways. Beyond simply opening new opportunities for innovators and entrepreneurs, digital technologies have broader implications for value creation and value capture. Research aimed at understanding the digital transformation of the economy needs to incorporate multiple and cross-levels of analysis, embrace ideas and concepts from multiple fields/disciplines, and explicitly acknowledge the role of digital technologies in transforming organizations and social relationships. To help realize this research agenda, we identify three key themes related to digitization—openness, affordances, and generativity—and, outline broad research issues relating to each. We suggest that such themes that are innate to digital technologies could serve as a common conceptual platform that allows for connections between issues at different levels as well as the integration of ideas from different disciplines/areas. We then summarize the contributions of the 11 papers presented in this Special Issue relating them to one or more of these themes and outlining their implications for future research.
A living lab is a physical or virtual space in which to solve societal challenges, especially for urban areas, by bringing together various stakeholders for collaboration and collective ideation. Although the notion has received increasing attention from scholars, practitioners and policy makers, its essence remains unclear to many. We therefore performed a systematic literature review of a sample of 114 scholarly articles about living labs to understand the central facets discussed in the nascent literature. In particular, we explored the origin of the living lab concept and its key paradigms and characteristics, including stakeholder roles, contexts, challenges, main outcomes, and sustainability. While doing this, we discovered that the number of publications about living labs has increased significantly since 2015, and several journals are very active in publishing articles on the topic. The living lab is considered a multidisciplinary phenomenon and it encompasses various research domains despite typically being discussed under open and user innovation paradigms. What is more, the existing literature views living labs simultaneously as landscapes, real-life environments, and methodologies, and it suggests that they include heterogeneous stakeholders and apply various business models, methods, tools and approaches. Finally, living labs face some challenges, such as temporality, governance, efficiency, user recruitment, sustainability, scalability and unpredictable outcomes. In contrast, the benefits include tangible and intangible innovation and a broader diversity of innovation. Based on our analysis, we provide some implications and suggestions for future research.
The analysis of how the development of knowledge-intensive business service (KIBS) sectors in certain territories contributes to rebuild the competitive advantage of manufacturing businesses – a process described as territorial servitization – has increasingly drawn scholarly and policy attention. The collection of nine papers in this special issue brings new insights into how institutional and spatial as well as socioeconomic and industry-specific attributes underpin the development of territorial servitization. By adopting a multidisciplinary perspective that combines a variety of frameworks (organizational, place-based, economic geography), the mechanics and relationships underlying territorial servitization as well as its territorial economic repercussions are developed. This editorial first portrays territorial servitization as a local hybrid value chain and argues that effective territorial servitization requires a value adding fit between manufacturers and KIBS. Also, it provides a number of yet unresolved topics that deserve academic attention
Cyber–physical systems combine physical objects or systems with integrated computational facilities and data storage. From that perspective, Smart Grids are a mixture of physical actuators, sensors, physical communication networks; and cyber computational and communication protocols and algorithms. In our work, we propose to extend the applicability of decentralized blockchain consensus protocols to the broad field of Cyber–Physical systems. Our contribution includes a proposal of a new family of cyber–physical systems, an in-depth discussion of new possibilities and inherent shortcomings. The proposed coupling of the data storage mechanisms, communication and consensus protocols, allows for deployment of self-sustaining cyber–physical environments in which all the mission-critical aspects in both the cyber and physical layer are effectively incentivized, coordinated and maintained. This includes the essential data storage, data exchange, but also the production, transmission and distribution of energy. To the best of our knowledge, it is the first such a comprehensive undertaking toward symbiotic cyber–physical systems and environments. The proposed family of systems is decentralized and does not imply the necessity of reliance on trusted third parties. We propose and discuss an architecture which incorporates physical, blockchain-enabled sensors and actuators capable of monitoring and altering parameters of the underlying physical layer. We analyze a particular instance of a blockchain-aided CPS’ where we are concerned with the power grid at both the micro and macro-grid level. At the macro-grid level we explore the possibility of utilizing blockchain-enabled physical actuators. These theoretical actuators are able to introduce savings by a near real-time routing of energy and enable for tracking of power losses thanks to decentralized accountability. At the micro-grid level we propose a network of blockchain-enabled smart meters to coordinate real-time auction-based energy trade. To glue together the elements of such an open, trustless, decentralized system, we discuss an intrinsic communication protocol capable of rewarding intermediaries of a data exchange for each transmitted byte. We tackle the feasibility, security and accountability challenges which we have faced and which will need to be considered by future architects of the new, exciting family of cyber–physical systems.
The purpose of this chapter is to discuss how and why academics and practitioners have benefited and might continue to benefit from shifting from a G-D logic to an S-D logic perspective. We do so by discussing four characteristics of S-D logic as a mindset. More specifically, we argue that, as a mindset, S-D logic can be seen as transcending, unifying, accommodating, and transformative. All of these characteristics relate to the basic purpose of science (cf. Simon, 1996) and other social institutional processes: the art of simplifying a complex world. As such, these characteristics can be thought of as tools that have both theoretical and practical implications. The theoretical implications take the form of conceptual inversions that can then be further applied to issues facing practitioners to build more midrange-level theories and inform counterintuitive strategic insights.
Software development processes have evolved according to market needs. Fast changing conditions that characterize current software markets have favored methods advocating speed and flexibility. Agile and Lean software development are in the forefront of these methods. This chapter presents a unified view of Agile software development, Lean software development, and most recent advances toward rapid releases. First, we introduce the area and explain the reasons why the software development industry begun to move into this direction in the late 1990s. Section 2 characterizes the research trends on Agile software development. This section helps understand the relevance of Agile software development in the research literature. Section 3 provides a walk through the roots of Agile and Lean thinking, as they originally emerged in manufacturing. Section 4 develops into Agile and Lean for software development. Main characteristics and most popular methods and practices of Agile and Lean software development are developed in this section. Section 5 centers on rapid releases, continuous delivery, and continuous deployment, the latest advances in the area to get speed. The concepts of DevOps, as a means to take full (end-to-end) advantage of Agile and Lean, and Lean start-up, as an approach to foster innovation, are the focus of the two following Sections 6 and 7. Finally, Section 8 focuses on two important aspects of Agile and Lean software development: (1) metrics to guide decision making and (2) technical debt as a mechanism to gain business advantage. To wrap up the chapter, we peer into future directions in the area.
In this conceptual piece we suggest that the institutional perspective is a prolific lens to study digital innovation and transformation. Digital innovation is about the creation and putting into action of novel products and services; by digital transformation we mean the combined effects of several digital innovations bringing about novel actors (and actor constellations), structures, practices, values, and beliefs that change, threaten, replace or complement existing rules of the game within organizations and fields. We identify three types of novel institutional arrangements critical for digital transformation: digital organizational forms, digital institutional infrastructures, and digital institutional building blocks. From this vantage point, an institutional perspective invites us to examine how these novel arrangements gain social approval (i.e. legitimacy) in the eyes of critical stakeholders and their interplay with existing institutional arrangements. Questioning the disruptive talk associated with digital transformation, we draw on the institutional change literature to illustrate the institutionalization challenges and that existing institutional arrangements are pivotal arbiters in deciding whether and how novel arrangements gain acceptance. We close this essay with discussing the implications of an institutional perspective on digital transformation for policy, practice and research.