Elsevier

Decision Support Systems

Volume 53, Issue 4, November 2012, Pages 813-824
Decision Support Systems

Service innovation readiness: Dimensions and performance outcome

https://doi.org/10.1016/j.dss.2012.05.015Get rights and content

Abstract

This study proposes a higher-order multidimensional construct of service innovation readiness (SIR) based on the organizational change literature and the awareness–motivation–capability perspective. Service innovation is gaining more attention due to its potential value for creating competitive advantage and improving organizational performance. This research conceptualizes SIR to consist of two adopting contexts (i.e., “strategic orientation toward service innovation” and “enabling mechanism of service innovation”) that, together, determine a firm's preparation to adopt organizational changes involved in service innovation. Six dimensions are also identified from a literature review and verified by industry expert interviews to define the two multidimensional adopting contexts. Data collected from 312 Taiwanese firms provide evidence to support the proposed factor structure of SIR and show that SIR positively correlates with SI performance. The findings contribute to the literature by theorizing SIR with a parsimonious structure that captures the complex conditions necessary for adopting service innovation. This study also yields some insight into the management of service innovation by providing managers an assessment that can be used to gauge a firm's status and direct its efforts in continuous improvement.

Highlights

► We propose a multidimensional framework of “service innovation readiness” (SIR). ► SIR consists of “Strategic orientation toward SI” and “enabling mechanism for SI”. ► The results show that SIR has a positive effect on service innovation performance. ► SIR provides the firms a tool for self-diagnosis and guidance to allocate SI efforts.

Introduction

The world's economic landscape is changing and is characterized, in part, by the fact that services dominate the economies of not only the world's most advanced nations but also many fast-growing and developing countries. For instance, in China, the government has mandated a focus on services growth for the next five years and further into the future, despite that it previously allocated tremendous national energies on manufacturing [13]. In addition, many leading firms have added service to their product offerings and provide total customer solutions. Scholars contend that manufacturing firms should shift toward “solution” and/or “service” offerings to improve their competitiveness in an era of increasing commoditization that characterizes many product markets [95]. That is, companies across different industries are realizing they must compete in service to survive and grow in the future. As companies acknowledge the existence of the challenges, they may also recognize the need to stay innovative in their service offerings so they are prepared for increasing global competition.

Notwithstanding the trend, service innovation has remained among the least understood topics in the service management and innovation literature [27], [31], [51]. The importance of service innovation is highlighted in a recent article that indicates “identifying drivers of sustained new service success” is a prioritized research topic for the science of service [75]. As noted by Jim Spohrer, Director of Service Research at IBM, “people have a good idea of what technological innovation is, but service innovation is more hidden.” [49]. The dearth of insights on how companies can prepare themselves for service innovation is noteworthy when one considers the potential of service innovation to drive revenues and affect people's lives. Hence, it would be a top priority for firms to be able to evaluate their readiness for service innovation prior to considering other issues pertaining to the implementation of service innovation.

“Readiness” is not a novel concept in the literature, and a review of the literature reveals a number of prior studies that have investigated individuals' readiness to adopt IT, IS, or technology [57], [76]. The readiness concept becomes more complicated when an organization, rather than individuals, is the focus of adoption because firm-level readiness for innovation tends to depend on a wide variety of factors. For example, several studies have focused on human, business, and technology resources as organizational readiness factors required for adoption of innovation [56], [71]. Others give more emphasis to attitude of top management [68], organizational characteristics [26], [46], or environmental conditions [56]. These studies suggest that research on firm-level readiness can, at best, only provide a partial explanation of the phenomenon and it is difficult to develop a unifying, one-size-fits-all framework of innovation readiness since the framework may be sensitive to the type of innovation and its adoption context. Although one might expect these readiness factors to be equivalently explanatory when applied in the context of service innovation (SI), one should avoid such facile generalization of prior research findings without taking SI characteristics into consideration. In sum, what has been noticeably missing from the literature is a robust framework and instrument to study the factors that affect readiness for service innovation and firm-level empirical evidence to explicate these factors.

Against this background, we propose the concept of service innovation readiness (SIR), which signifies a firm's self-assessment of its readiness for effectively implementing service innovation. To our knowledge, no construct in the literature of innovation and service science has fully captured this aspect of service innovation. The purpose of this study, then, is to demarcate the SIR concept and a corresponding framework that can be used for developing an inventory. To accomplish the purpose, the organization change (OC) view [5] and the awareness–motivation–capability model of competitive perspective [19] are used to develop a factor structure for SIR. To more precisely describe the compound structure of SIR with a parsimonious framework, we conceived it as a higher-order composite construct consisting of two multi-dimensional constructs that specify the conditions necessary for building up a firm's readiness for service innovation. We validate this construct and its measurement with a survey of 312 firms in Taiwan.

In doing so, this study makes several significant contributions to the extant knowledge of service innovation. First, it addresses an emerging but understudied topic by conceptually and empirically examining the critical managerial dimensions underlying service innovation. By identifying the actionable conditions and mechanism that constitutes a firm's SIR, this study tackles an important issue that has been identified as a top research priority in service science [75]. Second, our conceptualization of SIR as a higher-order formative construct allows this study to delineate what actions and resource of the firm should be attended to and how they can be integrated to enhance service innovation performance. This study validates the conceptualization of SIR with findings in support of the predicted relationship between SIR and its determinants and consequences in a nomological net. Third, being empirically supported as a reliable and valid measure in this study, SIR offers a useful tool for self-diagnosis and a practical guideline that managers can use to create organizational strategies and resources to prepare the firm for adopting service innovation.

The remainder of this paper is organized as follows. The next section provides an overview of service innovation, and this is followed by a theoretical conceptualization of SIR. Based on literature review, we identify two determining factors of SIR and their corresponding dimensions. In later sections, we report the research methods employed and the empirical validation of the SIR instrument. Finally, we present a discussion of results and their implications, and directions for future work in this area.

Section snippets

Service innovation

Despite an extensive literature on service management, service marketing, and service innovation, frameworks for managing service innovation remain scarce [39], [70], [92]. Early work focused on differentiating services from goods based on four characteristics, namely intangibility, heterogeneity, inseparability (or simultaneity of production and consumption), and perishability (inability to inventory service output) [99]. Yet, emerging views argue those characteristics are not generalizable to

Defining service innovation readiness

As previously mentioned, service is the fundamental basis of exchange [95]. The emerging view that a firm can enhance its competitive advantage through service [52] and the long held belief that innovation is a basic function of the firm [1] also imply the strategic importance of service innovation. At the same time, organizational readiness is suggested to play an important role in determining an organization's innovation readiness [74]. However, frameworks and empirical studies for strategic

Research methodology

This study takes the following steps to validate the SIR concept. First, we conduct a qualitative study for a purpose of verifying the SIR dimensions identified in the literature review. Second, we develop a survey that assesses the five SIR dimensions and SI performance. Third, we validate the factor structure of the SIR concept as a third-order formative construct with empirical data.

Scale reliability

We follow the approach suggested by Anderson and Gerbing [3] to assess the SIR model. The first step involves the analysis of the measurement model and the second step consists of testing the structural relationships in our framework. A confirmatory factor analysis (CFA) was conducted on the 31 SIR items using AMOS 5.0 to develop a measurement model with the six first-order SIR dimensions. The analysis reveals that most items loaded significantly (p < .001) on their respective dimensions with

Discussion

Facing highly complex and turbulent environments, service innovation has become a gateway for firms to maintain or capture markets, outdistance competitors, and assure sustainable growth. What drives the firms to continuously innovate their service offerings and establish competitive advantage? Based on a literature review and verification by industry expert interviews, this study proposes a theoretically driven conceptualization of SIR to address this question. The conceptual mode is

Acknowledgments

This research was supported by the Ministry of Economic Affairs in Taiwan (98-EC-17-A-29-S2-0005) and the National Tsing Hua University (100N2075E1).

HsiuJu Rebecca Yen ([email protected]) is a professor in the Institute of Service Science at National Tsing Hua University, Taiwan. She received a M.S. and a Ph.D. in Psychology from Rutgers, the State University of New Jersey. Her current research interests include Internet marketing, services marketing and management, and service innovation. She has published in the International Journal of Electronic Commerce, Information and Management, Journal of the Academy of Marketing Science, IEEE

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  • Cited by (0)

    HsiuJu Rebecca Yen ([email protected]) is a professor in the Institute of Service Science at National Tsing Hua University, Taiwan. She received a M.S. and a Ph.D. in Psychology from Rutgers, the State University of New Jersey. Her current research interests include Internet marketing, services marketing and management, and service innovation. She has published in the International Journal of Electronic Commerce, Information and Management, Journal of the Academy of Marketing Science, IEEE Transactions on Engineering Management, International Journal of Service Industry Management, International Journal of Production Economics, Marketing Letters, Journal of Applied Social Psychology, Journal of Experimental Social Psychology, and other venues.

    Wenkai Wang is currently a doctoral student in the Department of Information Management at School of Management, National Central University, Taiwan. His research interests include service innovation, customer knowledge management, organizational learning, and new service development.

    Chih-Ping Wei received a BS in Management Science from the National Chiao-Tung University in Taiwan, ROC. in 1987 and an MS and a Ph.D. in Management Information Systems from the University of Arizona in 1991 and 1996. He is currently a professor of Department of Information Management at National Taiwan University. Prior to joining National Taiwan University in 2010, he was a professor of Institute of Service Science and Institute of Technology Management at National Tsing Hua University in Taiwan and a professor of Department of Information Management at National Sun Yat-sen University in Taiwan. He was also a visiting scholar at the University of Illinois at Urbana-Champaign in Fall 2001 and the Chinese University of Hong Kong in Summer 2006 and 2007. His papers have appeared in Journal of Management Information Systems (JMIS), European Journal of Information Systems, Decision Support Systems (DSS), IEEE Transactions on Engineering Management, IEEE Software, IEEE Intelligent Systems, IEEE Transactions on Systems, Man, and Cybernetics, IEEE Transactions on Information Technology in Biomedicine, Journal of the American Society for Information Science and Technology, Information Processing and Management, Journal of Database Management, and Journal of Organizational Computing and Electronic Commerce, etc. His current research interests include information retrieval and text mining, knowledge discovery and data mining, text mining and information retrieval, knowledge management, and patent analysis and intelligence. He has edited special issues of Decision Support Systems, International Journal of Electronic Commerce, Electronic Commerce Research and Applications, Information Processing and Management, and Pacific Asia Journal of the Association for Information Systems.

    Chih-Ping Wei can be reached at the Department of Information Management, National Taiwan University, Taipei, Taiwan, ROC; [email protected].

    Hsuan-Yu Hsu is a Ph.D. candidate in the Department of Information Management, National Central University, Taiwan. Her research interests include virtual community, Internet marketing, and electronic commerce. Her publication has appeared in International Journal of Electronic Commerce.

    Hung-Chang Chiu is Professor of the Institute of Technology Management at National Tsing Hua University, Taiwan, ROC. His interests lie in areas of marketing of high-technology products and services marketing. His articles have been published by journals such as Journal of Retailing, Journal of Business Research, Journal of Advertising Research, and Industrial Marketing Management.

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