Realizing innovation in services
Introduction
Innovations have contributed to the growth in the number of service firms and to the scale of their operations, which in turn has increased their economic impact. The same applies to service activities in manufacturing firms. Innovations provide opportunities to increase the efficiency and quality of the service delivery process, both in the front and the back office, whilst also facilitating the introduction of new service concepts. To a large extent innovation theory has been developed by extending the research approach to innovation in the manufacturing industry to embrace innovations in services as well (Gallouj & Weinstein, 1997). The emphasis has been on technological innovations, and only a few studies have focussed on organizational innovations. In service firms, however, organizational innovations are important, as there is a strong emphasis on the development and implementation of organizational formulas (Gadrey, Gallouj, & Weinstein, 1995; Normann, 1984, 1991).
In the literature a number of different organizational innovations in services have been discussed, but it is difficult to compare the various forms. A broad concept such as modulization (Sundbo, 1994) is difficult to compare with process innovations as discussed in Gadrey et al. (1995). And the concept of modulization also goes beyond the concept of bundling, introduced by Normann (1984, 1991). The ideas behind the recombinative model (Gadrey et al., 1995; Gallouj & Weinstein, 1997) are different again, as they include some ideas about creating innovations, while the modulization concept has a strong emphasis on standardization as a key process in the realization of the innovation. The ambiguity surrounding the different forms of innovation in services is reinforced by the limited research that has been done on the processes for implementing innovations. Thus a systematic understanding of the key processes in realizing particular new organizational forms in services is lacking. The aim of this study is, first, to distinguish a number of particular organizational innovations in services and, secondly, to improve our understanding of the processes supporting each one of the organizational innovations singled out.
A better understanding of the processes and mechanisms underlying particular service innovations will help, for example, to explain the difficulty in imitating successful service innovators (Storey & Easingwood, 1998). Some of these innovative firms, like McDonalds and IKEA, appear easy to imitate, but somehow this is not the case. From other studies it has also been concluded that certain innovations appear very difficult to imitate (Barney (1991), Barney (1990); De Man, 1996). This difficulty is partly the result of a lack of understanding of the supporting processes of innovation. Some claim that the success of McDonalds is the result of a supreme mastery of the relevant logistics, while others refer to the strict adherence to the franchise formula (Love, 1995). In any case there is considerable ‘causal ambiguity’ (Reed & DeFilippi, 1990). More needs to be known about the supporting processes for developing and sustaining specific innovations in services.
In the next section we discuss the literature on innovations in services. In the following section on methodology we describe the explorative nature of our research and suggest that it can be seen as one of the first steps in theory building. In Section 4 on forms of innovations we present a scheme consisting of four such forms. The material drawn from 10 case studies is used to identify the main characteristics of innovations thus distinguished. Finally we focus on three organizational innovations and describe a number of key processes that underlie the implementation of these forms of innovation.
Section snippets
Innovations and the challenges of service management
Innovative developments in service industries seem to be difficult to explain in terms of traditional innovation theories and typologies (Damanpour, 1991). The main emphasis of innovation research is on new products and production processes, especially in manufacturing (Burgelman, Maidique, & Wheelwright, 1996; Gallouj & Weinstein, 1997). Relatively few studies have focused on innovations in services. This bias in the innovation literature probably restricts our perception of the challenge to
Methodology
In our research we concentrated on innovations that are more or less typical for service firms. The study is explorative and the objective is not to test a particular theory but to contribute to theory building in the field of innovation. Our aim is to explore and describe various forms of innovation in services and the supporting processes underlying those innovations. In line with the case research methodology used by Eisenhardt (1989), our project can be divided into three steps. The first
Forms of innovation in services
Richard Normann's work on ‘service management’ (1984, 1991) was a point of departure for our exploration of different forms of innovation. Normann (1984, 1991) describes four forms of innovation: social innovations, technical innovations, network effects and reproduction innovations. Normann's descriptions are interesting and provoking, although not always consistent or complete. His category of social innovations includes four types. Two of them, client participation and new linkages or
Conclusions
In this article three typical organizational innovations in services have been singled out and characterized in terms of various processes that support their realization. The main elements of particular organizational innovations and the supporting processes have been discussed and illustrated, using new empirical material from ten case studies. We have contributed to the debate about organizational innovations by determining the distinctive characteristics of three organizational innovations
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