The role of a firm’s innovation competence on customer adoption of service innovation

This paper aims to identify the dimensions of a firm’s service innovation competence. This paper also aims to establish the relationship between a firm’s service innovation competence dimensions and customer-oriented service innovation configurations and customer adoption. This study probes the supply side of service innovation to assess the key drivers or capabilities that influence the service innovation process at the firm level.

This study uses the triangulation method using existing theoretical concept supplemented by 18 in-depth interviews of senior level managers from service firms from three sectors – hospitality, mobile telecommunication services and financial services. The interview findings were supplemented by 12 service innovation case studies (four from each sector). Content analysis of in-depth interviews was performed using three raters, and inter-rater reliability was tested. Case studies were categorized in terms of the strength of the innovation competence dimension observed.

Based on the content analysis of the interviews and categorization of case study observations, six distinct dimensions of the firm’s service innovation competence were identified. Four attributes of each dimension were also identified. Based on the interview insights and case observations, seven propositions are suggested, and a conceptual framework is presented to establish the relationship between the firm’s service innovation competence dimensions and service innovation configurations and customer adoption.

This study was conducted in the Indian context and remains to be tested using quantitative research. Therefore, researchers are encouraged to test the proposed framework in a different geographical context to ascertain its validity.

The conceptual framework presented in the paper may help managers of service firms in building innovation capabilities that are relevant to development of customer-oriented innovations. This would lead to better customer adoption of their new services.

This paper fills an important knowledge gap regarding the dimensions of a critical supply-side component of service innovation, that is, innovation competence. Clear identification of competence dimensions and their relationship with customer adoption extends the current knowledge on service innovation.