Skip to main content
SpringerLink
Log in
Book cover

Service Innovation pp 97–128Cite as

Developing Service-Based Business Models: Which Innovation Capability for Which Innovation Dimension?

  • Chapter
  • First Online:

Part of the book series: Translational Systems Sciences ((TSS,volume 6))

Abstract

It is widely understood that firms innovate by altering their business model rather than only changing a particular technological aspect of their offerings. In many cases, also for manufacturers, actual value is being created through the provision of services. What has remained underexplored so far is the question of which innovation capabilities are most needed when developing a service-based business model. In this chapter, we discuss how both the concept of service innovation and the concept of business model innovation are variations of evolutionary theories typically applied only to technology. Using a large-scale survey, we test hypotheses regarding the co-occurrence of six (also evolutionary inspired) innovation capabilities on the one hand and changes in five particular business model dimensions on the other hand. Simultaneously regressing the capabilities on these dimensions confirms their distinctiveness, as each capability is linked to one or more dimensions. Our effort to combine two frameworks brings a vocabulary, mapping tools, measurement basis and empirical evidence on distinct patterns in the interlinkages between organizational capabilities and innovation outcome. These contributions can provide management guidance to organizations aiming to develop innovative service-based business models.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Although the type of organizations we look at in this chapter mainly concerns firms, many of the observations also have relevance for public organizations wishing to renew whatever it is they are providing. Perhaps incentives might be different, but governments do need to articulate how they create value that is not provided by the market (e.g. where private business models fail due to value capture problems; Teece 2010).

  2. 2.

    This chapter is based on so far unpublished elements from Chap. 6 in den Hertog (2010) and Chap. 4 in Janssen (2015).

  3. 3.

    The service innovation definition we provide covers the process of creating a new service and the resulting service itself. This ambiguity in the term ‘service innovation’ is even larger when considering the varied streams of relevant literature. As outlined in Janssen (2015), service innovation literature can refer to studies focused on innovation for service firms (but created by manufacturers, for instance), innovation in service industries (typically yielding new services, although the novelty could in principle still be purely technological); innovation through service firms (e.g. knowledge intensive business services helping others to innovate) and innovation with services (creation of solutions in which services as well as physical goods have a role, e.g. product-service systems).

  4. 4.

    We keep referring to service dimensions simply because they have proved appropriate for characterizing (novel parts of) services, which are the object of our study. We do not claim that the framework as such is relevant for services only. Rather the contrary seems to be the case, given the holistic nature of the framework (including service, technological and organizational elements) and the similarity to the elements found in business model definitions (see Saebi and Foss 2015 for an overview of definitions and concepts).

  5. 5.

    Taking a Darwinist perspective, one can recognize the corresponding sequence of variation, selection and retention.

  6. 6.

    Because they are so broadly defined, the capabilities we adhere to might be used for studying innovation in very different contexts. When examining the importance of respective capabilities, it is likely that we might find gradual differences (e.g. due to variations in intensity of customer interaction), but we see no particular need to look at different sets of capabilities in different situations. It is the wide scope of the selected capability framework that allows us to engage in comparative analyses.

  7. 7.

    The descriptions below are based on den Hertog et al. (2010) and den Hertog (2010).

  8. 8.

    Examples of these questions include: what do customers expect from a reliable partner; are our clients in need of 24/7 availability of our services; what sort of time constraints do our clients face and can we use them to think of better solutions that help our time constrained clients; what types of clients are using what types of interaction channels; what proposition would be valued most by our clients (den Hertog 2010)?

  9. 9.

    Eisenhardt and Martin (2000, p. 1108) remark in this context that: ‘Yet, while dynamic capabilities are certainly idiosyncratic in their details, the equally striking observation is that specific dynamic capabilities also exhibit common features that are associated with effective processes across firms.......there are more and less effective ways to execute particular dynamic capabilities ....there is best practice’. Similarly Winter and Szulanski (2001) indicate that there is a lot of specificity in how dynamic capabilities are translated and implemented in a particular firm.

References

  • Aa, W., & Elfring, T. (2002). Realizing innovation in services. Scandinavian Journal of Management, 18, 155–171.

    Article  Google Scholar 

  • Agarwal, R., & Selen, W. (2011). Multi-dimensional nature of service innovation: Operationalisation of the elevated service offerings construct in collaborative service organisations. International Journal of Operations & Production Management, 31, 1164–1192.

    Article  Google Scholar 

  • Alam, I. (2002). An exploratory investigation of user involvement in New Service Development. Journal of the Academy of Marketing Science, 30(3), 250–261.

    Article  Google Scholar 

  • Alkemade, F., Frenken, K., Hekkert, M., & Schwoon, M. (2009). A complex systems methodology to transition management. Journal of Evolutionary Economics, 19, 527–543.

    Article  Google Scholar 

  • Amit, R., & Zott, C. (2001). Value creation in E-business. Strategic Management Journal, 22(6–7), 493–520.

    Article  Google Scholar 

  • Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long Range Planning, 46, 419–426.

    Article  Google Scholar 

  • Bohnsack, R., Pinkse, J., & Kolk, A. (2014). Business models for sustainable technologies: Exploring business model evolution in the case of electric vehicles. Research Policy, 43, 284–300.

    Article  Google Scholar 

  • Bryson, J., & Taylor, M. (2010). Competitiveness by design and inimitability through service: Understanding the dynamics of firm-based competition in the West Midlands jewellery and lock industries. The Service Industries Journal, 30, 583–596.

    Article  Google Scholar 

  • Cainelli, G., Evangelista, R., & Savona, M. (2004). The impact of innovation on economic performance in services. Service Industries Journal, 24(1), 116–130.

    Article  Google Scholar 

  • Carlborg, P., Kindström, D., & Kowalkowski, C. (2014). The evolution of service innovation research: A critical review and synthesis. The Service Industries Journal, 34(5), 373–398.

    Article  Google Scholar 

  • Ceschin, F., & Vezzoli, C. (2010). The role of public policy in stimulating radical environmental impact reduction in the automotive sector: The need to focus on product-service system innovation. International Journal of Automotive Technology and Management, 10(2/3), 321–341.

    Article  Google Scholar 

  • Chae, B. (2012). A framework for new solution development: An adaptive search perspective. Service Industries Journal, 32, 127–149.

    Article  Google Scholar 

  • Chesbrough, H. (2011). Open services innovation: Rethinking your business to grow and compete in a new era. New York: Wiley.

    Book  Google Scholar 

  • Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11, 529–555.

    Article  Google Scholar 

  • Cusumano, M., Kahl, S., & Suarez, F. (2015). Services, industry evolution, and the competitive strategies of product firms. Strategic Management Journal, 36(4), 559–575.

    Article  Google Scholar 

  • den Hertog, P. (2000). Knowledge intensive business services as co-producers of innovation. International Journal of Innovation Management, 4, 491–528.

    Article  Google Scholar 

  • den Hertog, P. (2010). Managing service innovation: Firm-level dynamic capabilities and policy options. PhD-thesis. University of Amsterdam, Amsterdam.

    Google Scholar 

  • den Hertog, P., & de Jong, G. (2007). Randstad’s business model of innovation: Results from an exploratory study in the temporary staffing industry. Innovation: Management, Policy & Practice, 9(3–4), 351–364.

    Google Scholar 

  • den Hertog, P., Bouwman, H., Gallego, J., Green, L., Howells, J., Meiren, T. H., Miles, I., Moerschel, I., Narbona, A., Rubalcaba, L., Segers, J., & Tether, B. (2006). Research and development needs of business related service firms, RENESER Project. Dialogic/Fraunhofer IAO/University of Alcalá (Servilab)/Manchester Institute of Innovation, Utrecht/Stuttgart/Alcalá/Manchester.

    Google Scholar 

  • den Hertog, P., Aa, W., & De Jong, M. (2010). Capabilities for managing service innovation: Towards a conceptual framework. Journal Service Management, 21, 490–514.

    Article  Google Scholar 

  • Desmarchelier, B., Djellal, F., & Gallouj, F. (2013). Environmental policies and eco-innovations by service firms: An agent-based model. Technological Forecasting & Social Change, 80, 1395–1408.

    Article  Google Scholar 

  • Djellal, F., & Gallouj, F. (2005). Mapping innovation dynamics in hospitals. Research Policy, 34(6), 817–835.

    Article  Google Scholar 

  • Droege, H., Hildebrand, D., & Heras Forcada, M. (2009). Innovation in services: Present findings, and future pathways. Journal Service Management, 20, 131–155.

    Article  Google Scholar 

  • Edvardsson, B., & Enquist, B. (2009). Values-based service for sustainable business. Lessons from IKEA. Abingdon: Routledge.

    Google Scholar 

  • Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10–11), 1105–1121.

    Article  Google Scholar 

  • Frei, F. X. (2008). The four things a service business must get right. Harvard Business Review, 86(4), 70–80.

    Google Scholar 

  • Frenken, K. (2005). Innovation, evolution and complexity theory. Cheltenham: Edward Elgar.

    Google Scholar 

  • Gallouj, F., & Toivonen, M. (2011/2). Elaborating the characteristics-based approach to service innovation: Making the service process visible. Journal of Innovation Economics, 2, 33–58.

    Google Scholar 

  • Gallouj, F., & Weinstein, O. (1997). Innovation in services. Research Policy, 26(4–5), 537–556.

    Article  Google Scholar 

  • Gawer, A., & Cusumano, M. A. (2002). Platform leadership, how Intel, Microsoft and Cisco drive industry innovation. Boston: Harvard Business School Press.

    Google Scholar 

  • Hansen, M. T., & Birkinshaw, J. (2007). The innovation value chain. Harvard Business Review, 85(6), 121–130.

    Google Scholar 

  • Hooper, D., Coughlan, J., & Mullen, M. R. (2008). Structural equation modelling: Guidelines for determining model fit. Journal of Business Research Methods, 6, 53–56.

    Google Scholar 

  • Janssen, M. (2015). Service innovation in an evolutionary perspective. Eindhoven: Eindhoven University of Technology.

    Google Scholar 

  • Janssen, M., Castaldi, C., Alexiev, A., & den Hertog, P. (2015a). Exploring a multidimensional approach to service innovation. In R. Agarwal, W. Selen, G. Roos, & R. Green (Eds.), The handbook of service innovation. London: Springer.

    Google Scholar 

  • Janssen, M., Castaldi, C., & Alexiev, A. (2015b). Dynamic capabilities for service innovation: conceptualization and measurement. R&D Management. DOI: 10.1111/radm.12147.

    Google Scholar 

  • Kauffman, S. (1993). The origins of order: Self-organization and selection in evolution. New York: Oxford University Press.

    Google Scholar 

  • Kindström, D., Kowalkowski, C., & Sandberg, E. (2013). Enabling service innovation: A dynamic capabilities approach. Journal of Business Research, 66, 1063–1073.

    Article  Google Scholar 

  • Krishnan, B. C., & Hartline, M. D. (2001). Brand equity: Is it more important in services? Journal of Services Marketing, 15(5), 328–342.

    Article  Google Scholar 

  • Kuk, G., & Janssen, M. (2013). Assembling infrastructures and business models for service design and innovation. Information Systems Journal, 23, 445–469.

    Article  Google Scholar 

  • Lyons, R. K., Chatman, J. A., & Joyce, C. K. (2007). Innovation in services: Corporate culture and investment banking. California Management Review, 50(1), 174–191.

    Article  Google Scholar 

  • Maglio, P., & Spohrer, J. (2008). Fundamentals of service science. Journal of the Academy of Marketing Science, 36(1), 18–20.

    Article  Google Scholar 

  • Nair, S., Paulose, H., Palacios, M., & Tafur, J. (2013). Service orientation: Effectuating business model innovation. Service Industries Journal, 33(9–10), 958–975.

    Article  Google Scholar 

  • Nelson, R., & Winter, S. (1982). An evolutionary theory of economic change. Cambridge: Belknap Press of Harvard University Press.

    Google Scholar 

  • Normann, R. (2002). Service management: Strategy and leadership in service business (3rd ed.). Chichester: Wiley.

    Google Scholar 

  • Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. Hoboken: Wiley.

    Google Scholar 

  • Pine, B., & Gilmore, J. (1999). The experience economy. Boston: HBS Press.

    Google Scholar 

  • Roth, A. V., & Menor, L. J. (2003). Insights into service operations management: A research agenda. Production and Operations Management, 12(2), 145–164.

    Article  Google Scholar 

  • Saebi, T., & Foss, N. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33, 201–213.

    Article  Google Scholar 

  • Suarez, F., Cusumano, M., & Kahl, S. (2013). Services and the business models of product firms: An empirical analysis of the software industry. Management Science, 59(2), 420–435.

    Article  Google Scholar 

  • Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategy Management Journal, 28(13), 1319–1350.

    Article  Google Scholar 

  • Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2–3), 172–194.

    Article  Google Scholar 

  • Toivonen, M. (2010). Different types of innovation processes in services and their organizational implications. In F. Gallouj & F. Djellal (Eds.), The handbook of innovation and services (pp. 221–249). Cheltenham: Edward Elgar.

    Google Scholar 

  • Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal Market, 86(1), 1–17.

    Article  Google Scholar 

  • Vargo, S. L., & Lusch, R. F. (2008). Service-dominant logic: Continuing the evolution. Journal Academy Market Science, 1(36), 1–10.

    Article  Google Scholar 

  • Visnjic Kastalli, I., & Van Looy, B. (2013). Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31, 169–180.

    Article  Google Scholar 

  • Williams, K. L. (2006). Personas in the design process: A tool for understanding others. Atlanta: Georgia Institute of Technology.

    Google Scholar 

  • Williamson, O. (1999). Strategy research: Governance and competence perspectives. Strategic Management Journal, 20, 1087–1108.

    Article  Google Scholar 

  • Winter, S. G., & Szulanski, G. (2001). Replication as strategy. Organization Science, 12(6), 730–743.

    Article  Google Scholar 

  • Witell, L., & Löfgren, M. (2013). From service for free to service for fee: Business model innovation in manufacturing firms. Journal of Service Management, 24(5), 520–533.

    Article  Google Scholar 

  • Zähringer, D., Niederberger, J., Blind, K., & Schletz, A. (2011). Revenue creation: Business models for product-related services in international markets – the case of Zwick GmbH & Co. KG. The Service Industries Journal, 31(4), 629–641.

    Article  Google Scholar 

  • Zolnowski, A., Semmann, M., Amrou, S., & Böhmann, T. (2013). Identifying opportunities for service productivity improvement using a business model lens. The Service Industries Journal, 33(3–4), 409–425.

    Article  Google Scholar 

  • Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management, 37, 1019–1042.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Dialogic Innovatie en Interactie, Utrecht, The Netherlands

    Matthijs J. Janssen & Pim den Hertog

  2. Center for International Development, Harvard Kennedy School, Harvard University, Cambridge, MA, USA

    Matthijs J. Janssen

Authors
  1. Matthijs J. Janssen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Pim den Hertog
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Matthijs J. Janssen .

Editor information

Editors and Affiliations

  1. VTT Technical Research Centre of Fi, Helsinki, Finland

    Marja Toivonen

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer Japan

About this chapter

Cite this chapter

Janssen, M.J., den Hertog, P. (2016). Developing Service-Based Business Models: Which Innovation Capability for Which Innovation Dimension?. In: Toivonen, M. (eds) Service Innovation. Translational Systems Sciences, vol 6. Springer, Tokyo. https://doi.org/10.1007/978-4-431-54922-2_5

Download citation

Publish with us

Policies and ethics

Search

Navigation