New Service Development Process

Abstract

To continue to grow, more and more U.S. service firms have looked overseas in recent years to find markets for their offerings. Thus, innovation in the global context has become a strategic imperative for many service firms. While the issue of how to foster service innovation has been an area of extensive research, the cross-national comparison of innovation practices particularly between developed and emerging countries has been only a nascent field of research. To address this gap in the literature we conducted a comparative study of new service development process and stages of the financial service firms in an emerging country, India, and a developed country, the United States. The results support the central argument of the article that significant cross-national differences do exist with regard to a firm's new service development process. The findings should be of value to managers faced with the tasks of selecting and managing service innovation in emerging markets, as well as those firms experiencing international competition.     

Measuring the Performance of New Service Development Activities

The aim of this research was to investigate how service firms evaluate their new service development (NSD) activities. A survey of marketing managers in UK service firms was used to elicit information on two subject areas. First, the firm's approach to NSD, its strategy, and the scope of its activity in this area. Second, the firm's approach to measuring performance at both the project and the programme level. It was found that although new services are an important source of revenue for most, firms are still not satisfied with their ability to develop new services. On the whole, service firms employ a limited number of measures of performance, and often these do not reflect the reasons behind development. Significantly, financial measures of performance are most often used by less innovative firms, fast followers employ customer-based measures of performance, and truly innovative firms measure performance along a number of softer internal dimensions. The management implications of these findings are discussed.     

Innovation patterns and their effects on firm performance

This study aims to identify various innovation patterns and understand their effects on firm performance across business service sectors. By collecting empirical data from 198 Korean business services firms, we explore these firms’ major innovation patterns, conceptualized as combinations of different service innovation dimensions: service concept, service delivery, customer interaction, and technology. Then, in accordance with the innovation patterns they display, we group these firms into four clusters: ‘service delivery-based high-technology', ‘service delivery and customer interaction-integrated', ‘customer interaction-based high-technology', and ‘strongly balanced’ innovators. Last, we investigate whether these patterns influence firm performance. Our findings are three-fold: (1) the innovation patterns in business service firms result from the creation of new combinations of major service innovation dimensions, (2) four independent innovation patterns emerge in business service firms, and (3) these patterns lead to different levels of firm performance. Practically, our findings highlight the importance of highly qualified employees, customer interaction, and technology in improving financial performance.     

Influence of innovation on performance: analysis of Spanish service firms

The main objective of this research was to analyse innovation in service firms. In strategic management, the methodology of fit allows us to study the adjustment between two dimensions by revealing the internal consistency between them and its influence on the efficiency of firms. This paper is focused on the analysis of fit between types of services (classified according to intensity of innovation) and the innovation decisions made by these firms. The fit has been contrasted through the methodology of adjustment as an approach to the ideal profile. An important question in this paper consists in revealing whether the fit between the type of services and innovative decisions influences a firm's performance.     

Innovation management in service firms: a research agenda

This article suggests an agenda for further research on innovation management in service firms. It investigates differences and similarities between issues identified by previous academic research and issues brought up by practitioners within the area of innovation management in service firms. The results show that there are some major differences; for instance, researchers stress a need for formalized processes for development work, while practitioners focus on facilitating innovation in everyday operations. The main conclusion is that in order to bridge the gap between research and practice we would encourage further research on innovation in service firms to (1) conduct micro studies of innovation work, (2) view innovation in the context of everyday operations and (3) focus on co-workers’ innovative potential.     

Logistics service capabilities and firm performance of international distribution center operators

This study empirically evaluated the crucial logistics service capabilities and firm performance of international distribution center operators in Taiwan. Three critical logistics service capabilities were identified based on factor analysis: (a) innovation capability, (b) customer response capability, and (c) flexible operation capability. Cluster analysis was subsequently used and based on their mean scores in the three logistics capability dimensions, respondents' firms were assigned to one of three groups, namely: customer response and flexible operation capabilities-oriented firms, customer response and innovation capabilities-oriented firms, and customer response capability-oriented firms. Findings indicated that customer response and innovation capabilities-oriented firms had the best firm performance, followed by customer response and flexible operation capabilities-oriented firms and customer response capability-oriented firms.     

Prior Knowledge and New Product and Service Introductions by Entrepreneurial Firms: The Mediating Role of Technological Innovation

Most research on new product and service development by entrepreneurial firms takes an individual‐level, prelaunch perspective or firm‐level postlaunch perspective. Our study examines two components of the new product and service introduction process: how entrepreneurs' prior knowledge underpins (1) firm technological innovation prior to the introduction of new products and services (prelaunch) and (2) postlaunch viability of those new products and services. Our findings, based on a series of analyses of data from 158 entrepreneurial firms, show that formal technological innovation fully mediates the relation between prior knowledge and the introduction of viable new products and services.     

Understanding the Innovation Behavior of Family Firms

This paper examines innovation behavior in family firms, analyzing their innovation efforts, sources, and results. Its underlying premise is that innovation behavior depends on the firm's resource endowment and the level of risk inherent in the decision to innovate, factors that make family involvement an influential characteristic in innovation processes. Using a large sample of Spanish firms, the findings show that family firms perform fewer innovation efforts and are less inclined to turn to external sources of innovation—such as technological collaboration—than nonfamily firms. Finally, family firms are more likely to achieve incremental innovations than radical innovations.     

An innovation perspective on Chinese retailers' competitive advantage

Given the emergence of strong local retail firms in China over the last two decades, this paper aims to explore their competence enhancement and capability building process from the innovation perspective. Innovative measures on retail format, activity and governance dimensions of three leading local retailers in China are investigated using an in-depth case study approach. After each case is studied on the three dimensions, a cross-case analysis is conducted using thematic analysis to examine their innovative strategies and to explore their sources of innovation. The three cases share notable similarities in their strategies that are in sharp contrast to those of foreign retailers. On the retail format dimension, they have all achieved differentiation by formulating niche strategies and succeeded in creating a strong reputation among customers and retaining the same. On the retailing activities dimension, they have all developed a profit-making model through unique supply chain management and stressed construction of logistics centres and operational standardisation. On the governance dimension, they have established an efficient incentive and reward mechanism to motivate employees and encourage innovative practice. They have also built long-term collaborative relationships with their suppliers. Based on these three cases, it is also found that local embeddedness, latecomers' advantages, business agility and a risk taking entrepreneurial mentality are the crucial factors behind the generation of efficient innovations of China's local retailers. With these findings, this paper has extended and enriched existing knowledge on latecomers' catch up and service innovation. It has constructed an analytical framework for retail innovation by building on relevant attempts in the existing literature. A theoretical framework that explains how indigenous Chinese retailers have managed to successfully compete with foreign retailers in China using innovative strategies has also been established based on empirical data.     

Discovering the variables that influence new home‐buyer service satisfaction

While home builders traditionally think of customer service in terms of upgrades and mortgage options, home buyers are thought to view the quality of service on a much broader basis. Previous research has identified five dimensions of service quality: appearance, reliability, timeliness, knowledge, and empathy. Home‐buyer satisfaction with service quality is then the result of home builders providing services that are perceived as meeting or exceeding buyer expectations. Although much research has been done regarding home‐buyer satisfaction with service quality, there is still a gap between builders' and home buyers' perception of the quality of service. Builders need to identify and understand home‐buyer needs in order to constantly improve service quality. This paper describes an exploratory study that focused on customer satisfaction with service quality. The objective of this study was to assess the correlations between various factors on home‐buyer expectations and their perceptions of service quality. Demographics considered in this study included age, gender and household income, while transaction characteristics included purchase price, number of occupants and house size. Characteristics such as higher income, higher purchase price, and larger house size appeared to value dimensions such as reliability most highly. Characteristics such as lower income, lower purchase price and smaller house size appeared to value dimensions such as empathy and appearance most highly. Gender, age and household size did not have significant associations with expectations or relative importance, but age and household size were associated with actual perceptions of service dimensions. Understanding the influence of these variables on customer satisfaction with service quality can positively impact home builders through improved reputation and increased local referrals.     

Facilitators of organizational innovation: The role of life-cycle stage

One of the most serious challenges facing an entrepreneurial company, particularly a high-technology firm, is knowing how to manage innovation as the organization evolves. Macro-level facilitators/inhibitors of innovation—i.e., organizational and environmental conditions of a firm that promote or restrain innovation such as the structure of an organization, its incentive system, resources provided by its environment, or its ways of analyzing firm-external information—and their relationship to the innovativeness of the firm are considered in this study.Two basic arguments have been put forward previously as to why the innovativeness of an organization may change as it evolves. First, it has been suggested that facilitators of innovation change over time and so will firm innovativeness. That is, the relationship between the facilitator and innovation stays unchanged but the facilitator itself is transformed, causing changes in firm innovativeness as it develops. For instance, it has been suggested that mature firms become less innovative because their structure becomes overly formalized to perform other functions more efficiently, which then stifles innovative processes. Second, other researchers have proposed that the relationship between a facilitator and innovation changes as firms evolve; for instance a formal structure may support innovation in a younger firm because it allows the entrepreneur to focus her energy, whereas it may suppress innovation later since it inhibits an innovator's interaction with other environments. The results of our analysis, using data from 326 U.S. firms in different stages of their development and involved in many kinds of high-tech industries, support the second theory.However, the results for the relationships of the individual facilitators to innovation were not always as expected. We found that formally structured young firms were less innovative than informal ones and that in older organizations, formalization had no negative impact on innovation. This finding possibly can be explained with micro-level facilitators of innovation: younger firms may have more entrepreneurial personnel whose ability for innovation is more inhibited through a formal structure than the more “seasoned” employees in older, larger firms. However, this finding implies that the concern for formal structures with respect to firm innovativeness does not necessarily apply as typically assumed.Of similar significance was our finding with respect to the relationship between financial incentives and innovation. It has been suggested that younger rather than older firms use incentives such as equity to encourage an innovative environment. Results of this research, however, show that innovation is associated with stock incentives especially in older firms. This may be an indication for older firms to use differentiated incentives that reflect the individual's contribution to the firm to retain innovative personnel, whereas start-ups might rely on the excitement of working in a new venture as an incentive for innovative behavior.More in line with expectations were the results for how firms process external information. Environmental scanning and data analysis were positively associated with innovation, and this more so in older firms, presumably because they have become more remote from developments outside the organization. This result confirms the notion that much innovation by a firm is initiated externally. However, the results also indicate that the conditions of the environment itself are of lesser importance to firm innovativeness than the firm's active pursuit of information from its environment. An often discussed implication of these findings is that the boundaries of a firm must be permeable, at least from the outside in, and systematic information gathering from customers, competition, research institutions, etc. may be necessary to the success of a firm that depends on its product development. This seems especially important for older firms.As expected, the centralization of power in an organization also affected innovation. Centralization correlated positively with innovation in new ventures and negatively in older firms. This indicates the importance of the entrepreneur and strong leader in a start-up. It also suggests, though, that as the firm matures, this person has to give up some of her control and may have to relinquish the job at the head of the organization to someone else.Finally, there are some more general implications of this work to managers involved with organizational innovation. First, reliance on past experience may be detrimental to future performance. Whereas a firm evolves through different stages, means that have facilitated innovation earlier may be detrimental to it now or tomorrow, and vice versa. Second, copying successful strategies for innovation from other firms may not necessarily work—not because their implementation was worse but because the conditions of the other firm, for instance its evolutionary stage or its micro-level facilitators, were different.Researchers who study innovation should consider including life-cycle stage as a potential moderating variable. Factors that facilitate innovation at some point during an organization's evolution actually hinder it in another. Also, factors that were unimportant to innovation at the inception of a firm may facilitate it in later stages. This study supports the conclusion that the consideration of contingency factors, such as life-cycle stage, may enhance the development of a theory of organizational innovation.     

INNOVATION MANAGEMENT IN THE GERMAN TRANSPORTATION INDUSTRY

This article develops a conceptual framework for innovation management in logistics service providers, taking both a macro‐sectoral and a micro‐firm level perspective. Empirical data pertaining to the German transportation industry is applied in order to illustrate the current situation. In the analysis, the author distinguishes between various types of innovation: (1) product/service and process innovation, (2) market novelties, product‐range novelties and product imitations, and (3) ad hoc and planned innovation. The results indicate that despite the importance of innovation for the competitiveness of logistics service providers, innovation activities of firms in this industry and the share of innovators are at a low level compared to other industries. Only 30% of the LSP's are innovators. LSP innovation rests less on structured innovation, new product development and new product commercialization processes, instead, becomes often visible in form of technological advanced infrastructure and equipment investments. It is recommended that in the future LSP's should make more use of one or all forms of innovation activity discussed in this article.     

Co-production of service innovations through dynamic capability enhancement

The main aim of this paper is to investigate the effect of co-production practices with customers on service innovation. Specifically, we sought to determine whether dynamic capabilities (the specific abilities a company has to shape, reshape, configure, and reconfigure idiosyncratic assets to respond to changing technologies and markets) could mediate the effect of co-production on service innovation. In this paper, we examine the factors that could influence co-production practices and determine whether organizational commitment moderates the effect of co-production practice on an organization's dynamic capabilities. Using a survey approach of Taiwanese firms, we showed that dynamic capability fully mediates the effects of co-production practice on service innovation and that market orientation and customer matching have a significant influence on co-production practices. In addition, this study has empirically demonstrated that service firms would be well advised to engage in developing service innovation through enhancing their own dynamic capabilities.     

A review and evaluation of market orientation research in an emerging African economy

ABSTRACT

The paper synthesizes the level of strategic market orientation of firms operating in the emerging economy of Ghana over the last two decades. It dwells on market orientation studies in general, and the banking industry and exporting firms in particular. Market orientation has a positive relationship with performance for both foreign and domestic firms across the many studies. Foreign firms in general appear more market oriented due to experience effect and relationship with parent organizations. As competition heats up in the banking industry, organizations need to be more innovative to sustain their performance or to survive. For exporting firms, there is the need for decreased formalization and increased decentralization so as to enhance the levels of market orientation. The paper develops propositions to guide organizations in applying marketing principles in the running of their business activities. Further, the paper provides an update on the literature with suggestions for future research in the theory and practice of strategic market orientation in the context of the study.     

How Environmental Management Competitive Pressure Affects a Focal Firm's Environmental Innovation Activities: A Green Supply Chain Perspective

Recently, environmental management offers firms a source of competitive advantage in the marketplace. The development of environmental innovations is critical to the success of today's firms. Drawing on the Schumpeterian perspective of competition, this research examines how the perception of rival firms' green success influences a firm to pursue and produce environmental innovation through its green supply chain integration activities. Using survey data from 230 firms, a conceptual model is developed and tested using structural equation modeling. We find that the firms in our sample do perceive pressure from their competitors' success in environmental management activities, and thus take supply chain action to pursue integration activities. By differentiating incremental and radical environmental innovation, this study also reveals the role of three dimensions of green supply chain integration (internal, supplier, and customer integration of green product development) on incremental and radical environmental innovation separately. Specifically, findings suggest that green supply chain integration has a positive impact on developing incremental environmental innovation, while only customer integration has a significant positive impact on developing radical environmental innovation.     

Management of Innovation in Services

The article discusses two issues. The first is whether service firms innovate at all; the second is how they organise the innovation activities. The basis for the analysis is a series of case studies in Danish service firms. The first issue is discussed theoretically. Of the several paradigms within traditional innovation theory, the strategic innovation paradigm is the most adequate to explain service innovations. Organisational learning must be separated from innovation whereby the latter means a jump in turnover and profit while the first means a lower and continuous growth. The emphirical analysis demonstrates that the service firms innovate. The second issue is analysed empirically. Different ways of organising the innovation activities are set placed a taxonomy. It is concluded that the service firms rarely have R&D departments and innovation generally is an unsystematic search-and-learn process.     

Process management practices: organizational (dis-)similarities

Organizational processes have been manifested as resources which are difficult to imitate. Not least because goods and services are offered worldwide on comparable levels, processes are nowadays sources of competitive advantage. Manufacturers recognized process management's benefits early on. Meanwhile service providers adopt related practices with slight adaptations as well and even potentials for small and flexible firms have been revealed. From a present-day perspective, the question arises whether manufacturers and large firms are still more process oriented than their entrepreneurial counterparts. The results of a survey-based comparison show that this situation continues to hold with fewer differences between manufacturers and service providers. However, it became clear that the process culture – one of six investigated factors – is independent from a firm's industry affiliation and size. The evidence demonstrates that service providers progress on their journey to process management, which is taking an increasingly decisive role in the management of service operations.     

Differentiation value through services in a manufacturer's delivery chain

The delivery of industrial goods includes various possibilities for service business. Previous research has concentrated on third-party logistics (3PL) providers' perspective on service opportunities. This study takes the manufacturer's perspective in inter-organizational relationships and investigates the potential for differentiation value though services associated with the delivery of industrial goods. Field observation was carried out on three high-volume construction component deliveries, to uncover differentiation value drivers and the emergence of service opportunities in a manufacturer's delivery chain. The results complement earlier 3PL-centered goods delivery research by showing that the manufacturer's unique product and process competences, and activities in the delivery chain drive differentiation value, enable new service opportunities. The findings, thereby, draw attention to manufacturers and their competences as sources of added-value service in the delivery of industrial goods. Manufacturing firms have various options for differentiation and centrality in the inter-organizational network through cooperation with third parties. The results reveal that third parties can be hidden sources of added customer value in the goods delivery chain. The differentiation value for different firms in the industrial goods' delivery chains can emerge when firms begin to develop and offer services to each other, and therefore a proactive and in-depth analysis of their customers' differentiation-oriented value hierarchies is required.     

Organizational culture,innovation, and performance: A test of Schein's model

Innovation is the key to organizational survival and therefore the study of processes that support innovation should be of interest to researchers and practitioners alike. Schein's multi-layered model of organizational culture offers a useful framework for thinking about processes that foster innovation. A defining characteristic of the model is the subtle but important distinctions between the varied “layers” of organizational culture (i.e., values and norms, artifacts and behaviors). The basic assumption of this study is that Schein's model offers a tractable explanation of cultural processes that support organizational innovation, especially in service firms. Despite the intuitive appeal and practical value of Schein's conceptual framework, empirical research in relation to the model is limited. This paper develops a rationale for an empirical model based on Schein's conceptual model; the study reports a test of an empirical model. Data collected from approximately 100 principals of law firms provides a suitable empirical context for a test of the model. The findings generally support the hypothesized relationships. A key result is how layers of organizational culture, particularly norms, artifacts, and innovative behaviors, partially mediate the effects of values that support innovation on measures of firm performance. The findings have implications for theory and practice, especially in relation to building an organizational culture within professional service firms that fosters innovative behavior.     

Impact of industry sector on corporate diversification and firm performance: Evidence from Indian business groups

Prior business group (BG) studies implicitly assume that corporate diversification‐firm performance relationships are uniform across industry sectors. This generalization may lead to research implications that are not equally true for BG‐affiliated manufacturing and service firms. Drawing on strategy and marketing literature, this research addresses this scholarly gap. Our empirical analysis of a large sample of BG‐affiliated Indian firms over a five‐year period (2004‐2008) indicates that the influence of corporate diversification on firm performance is greater for affiliated service firms than affiliated manufacturing firms. Results also indicate that the influence of BG size and diversity on diversification‐firm performance relationship varies significantly depending on whether the focal firm belongs to the manufacturing or service sector. Firm's share ownership does not generate similar influence. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.