SERVICE INNOVATION PERFORMANCE AND INFORMATION TECHNOLOGY: AN EMPIRICAL ANALYSIS FROM THE DYNAMIC CAPABILITY PERSPECTIVE

Abstract

Service firms need to continuously innovate their service offerings in order to remain competitive in constantly changing market conditions. Successful innovators utilise current information technology (IT) to access service innovation capacity and knowledge which can be located internal or external to their organisation. In this paper, we develop and test a theoretical framework that explains how IT can contribute to service innovation performance, and finally, to service provision performance. Drawing on dynamic capability theory, we differentiate between sensing (SN), seizing (SZ), and transformation (TF) as the key abilities in service innovation. With our theoretical model, we can explain almost 40% of the variance in service innovation performance (SIP) (R 2 = 0.3955) and provide evidence for the multi-faceted and significant effects of IT. In particular, we are able to show a significant influence of inter-organisational IT support on SN and SZ abilities while organisational IT support has a significant impact on TF abilities.