Service Innovation Viewed Through a Service-Dominant Logic Lens: A Conceptual Framework and Empirical Analysis

TLDR

Service innovation research has largely been grounded in traditional new‑product development of tangible goods. The authors aim to develop a conceptual framework and hypotheses to investigate how antecedents influence two facets of service innovation—volume and radicalness—and how these facets affect revenue and profit growth. They construct the framework, formulate hypotheses, and test the model using data from luxury hotels. Results show that customer collaboration increases innovation volume, partner collaboration increases radicalness, customer orientation and innovative orientation together boost radicalness, contact‑employee collaboration enhances both facets, knowledge integration mechanisms promote radicalness only, and each innovation outcome differentially impacts revenue and profit growth.

Abstract

Research to date on service innovation is rooted primarily in traditional new product development focusing on tangible goods. In this article, the authors invoke insights from the emerging service-dominant logic (SDL) perspective and propose a conceptual framework for investigating the antecedents and consequences of service innovation. They then develop a set of hypotheses pertaining to potential predictors of two distinct facets of service innovation (volume and radicalness) and the impact of the latter on two measures of firm performance (revenue growth and profit growth). They test their proposed model using data from a sample of luxury hotels and find that (a) collaborating with customers fosters innovation volume but not radicalness (and vice versa for collaborating with business partners); (b) a firm’s customer orientation—both directly and in interaction with innovative orientation—contributes to innovation radicalness; (c) collaborating with contact employees enhances both innovation volume and radicalness; (d) the use of knowledge integration mechanisms contributes to innovation radicalness (but not volume); and (e) both innovation outcomes have significant but somewhat different effects on the two performance measures. They discuss the theoretical and managerial implications of their findings and conclude with the study’s limitations and directions for further research.