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PurposeThe purpose of this paper is to study the impact of back-office (BO) service capability and front-office (FO) service capability, and how firm age influences the impact of these service capabilities on small and medium size enterprise (SME) performance.Design/methodology/approachBased on the prior literature on servitization and firm operational capabilities, hypotheses were developed on the impact of service capabilities on firm performance. These hypotheses were tested using a survey and externally sourced financial data on 224 SMEs in the software industry.FindingsFO service capability has a positive impact on firm performance of SMEs. The effect of BO service capability was weaker and partly contrary to expectations, showing a negative effect on firm performance for young SMEs. As hypothesized, the impact of both BO and FO service capability is moderated by firm age. Young SMEs benefit more from FO service capability. For older SMEs, BO service capability becomes increasingly more important.Practical implicationsAs different capabilities lead to different outcomes, SMEs need to carefully consider which service capabilities to invest in. As the relative importance of capabilities changes over time, SMEs need to be ready to change their strategic focus over time toward BO capabilities to attain optimal outcomes.Originality/valueThe findings suggest that factors such as industry, firm size, and firm age affect the optimal servitization path, and that current understanding of servitization does not necessarily apply to all servitized firms. The study also provides further evidence of the impact of service capabilities on firm performance.

Service innovations challenge existing offerings and business models, shape existing markets, and create new ones. Over the last decade, service research has shown increasing interest in the concept of innovation and should by now have reached maturity and created a strong theoretical basis. However, there is no coherent theoretical framework that captures all the facets of service innovation, and to move service innovation research forward, we must revisit the key assumptions of what an innovation is. To enable this, the present article addresses three fundamental questions about service innovation: (1) What is it and what is it not? (2) What do we know and what do we not know? and (3) What do we need to know to advance service research? By doing so, this article offers an updated and comprehensive definition of service innovation and provides a research agenda to suggest a path forward.

COVID-19 primarily spreads through close contact between humans and has affected retailing industries extremely hard. To manage the situation retailers have turned to service innovation to change their operations to make consumers feel safe while shopping. This research focuses on the role of service innovativeness in retailing firms during the COVID-19 pandemic through an empirical study of almost 6000 consumers of 28 retailing firms. The results suggested that retailers with high service innovativeness performed COVID-19 imposed innovations better to improve their relative attractiveness. For retailers with physical stores, changes to the servicescape and the offering were found to be the key antecedents of service innovativeness. The findings on COVID-19 imposed service innovations demonstrate the importance of service innovativeness in successfully changing retailing services to adjust to the restrictions from governments and safety needs of customers.

A new trend seems to be emerging for multinational manufacturing companies to make a strategic reorientation into becoming service providers. For some companies, such as Kone and IBM, the revenues from services are 50% or more of their total sales. Despite the increasing interest in exploring various aspects of the service part of the business in manufacturing companies, existing research has not focused on the interdependencies between different service strategies and organizational designs. This article studies different service strategies in manufacturing companies and highlights the organizational design necessary for implementing each service strategy. The service strategies explored are aftersales service providers, customer support service providers, outsourcing partners, and development partners. Each service strategy is supported by organizational design factors related to the service orientation of corporate culture, the service orientation of human resource management, and the service orientation of organizational structures. This research concludes that a specific strategy-structure configuration is needed in order to succeed with a chosen service strategy.

The world is being shaped by service. All the world's most advanced economies are dominated by service, with many countries having more than 70 percent of their gross domestic product (GDP) generated by it. The service sector also employs the largest number of people and it is the fastest growing sector, both in number of companies and employees. The questions posed in this book are: (1) How is the service sector growing; (2) what is service innovation; (3) what are the drivers of service innovation; and (4) how can organizations innovate service in a structured way? The book views service as the value creating activity that customers perform in their own context: The role of a company is to provide the resources and knowledge to enable value creation. Based on this view, we develop a model of service innovation. Service innovation is a multifaceted concept dependent on the purpose of the innovation. These purposes could be to: differentiate, finance, help, experience, and streamline the process or offering. In turn, these result in: brand innovation, business model innovation, social innovation, experience innovation, process innovation, and behavioral innovation, respectively. In this book, we develop guidelines for what is required from the organizational perspective, how should an organization view its customers in order to be successful, what does a service development process look like, and how to transform an organization that is goods-centric to become service or solution provider. Despite the heightened focus on service in many business sectors, most models and theories of innovation are based on a goods perspective, assuming that the norm is a physical good. We believe that the norm is actually experiential and service based. This book addresses this mismatch of theory and practice for the benefit of those who are seeking to understand, teach, and practice service innovation.

COVID-19 primarily spreads through close contact between humans and has affected retailing industries extremely hard. To manage the situation retailers have turned to service innovation to change their operations to make consumers feel safe while shopping. This research focuses on the role of service innovativeness in retailing firms during the COVID-19 pandemic through an empirical study of almost 6000 consumers of 28 retailing firms. The results suggested that retailers with high service innovativeness performed COVID-19 imposed innovations better to improve their relative attractiveness. For retailers with physical stores, changes to the servicescape and the offering were found to be the key antecedents of service innovativeness. The findings on COVID-19 imposed service innovations demonstrate the importance of service innovativeness in successfully changing retailing services to adjust to the restrictions from governments and safety needs of customers.

Manufacturers across many industries use service infusion to address the changing customer demands and improve their competitive position. However, understanding the drivers of successful service infusion is a complex process. Using business model and configuration theories, this study conceptualizes and analyzes the interplay of different driver domains for suppliers, customers, and their business relationships. In particular, we analyze how service offering, service pricing, service capabilities, and the service infusion process interact in affecting service infusion success and failure. 137 interviews relating to 25 business relationships are analyzed via configuration analysis, particularly fuzzy set qualitative comparative analysis (fsQCA). Results show that different equifinal configurations exist (i.e., different ways to succeed with service infusion). We also find that "more is not always better." For example, service infusion success can be achieved without fully developed service capabilities. In addition, successful configurations are often very similar to those leading to failure. A dyadic analysis demonstrates that customer service capabilities are overall more important than those of suppliers. From these findings, we derive priorities for future research. In particular, our study points toward the need to better understand the interplay between service infusion drivers. Second, we advocate the augmentation of research perspectives in service infusion by taking into account the supplier, customer, and dyadic perspectives. Lastly, the importance of understanding drivers of service infusion failure is highlighted. For managers, our study shows the importance of relational audits as a starting point to deciding on how to infuse services in a business relationship.

Purpose
– The purpose of this paper is to explore the role of innovation modes in understanding challenges of integrated NSD and NPD, and the use of structured NSD processes in manufacturing firms.


Design/methodology/approach
– The research is based on a two-stage multiple case study. The first stage is an interview study of 17 key informants representing manufacturing firms in the machine industry. The second stage is an in-depth study of three service innovations at three manufacturing firms based on 16 interviews with key informants.


Findings
– The results of the study show that NSD processes are often more structured if the service is developed separately from the product. The fact that different innovation modes benefit from varying degrees of structure in the development process means that integrated service development can be challenging. Furthermore, service innovations often follow a trajectory of innovation modes before succeeding in the market. Some innovation modes occur within the NSD process, while others occur outside the process. One success factor for NSD is the fit between the innovation modes and the NSD process, rather than the NSD process per se.


Originality/value
– This research uses innovation modes to explain why NSD in manufacturing firms is often performed on an ad hoc basis, and how service innovations go through a trajectory of innovation modes. In this way, the study contributes to theory development of service innovation, and specifically service innovations in manufacturing firms.

AbstractPublicly funded national science agencies create value as innovation catalysts and through their scientific and research missions, they tackle wicked problems. Understanding how dynamic capabilities and business model innovation enable research‐intensive organisations to seize the market in the mission is key to translating bold new science that has impact. We qualitatively explore how Australia's national science agency—the Commonwealth Scientific Industrial Research Organisation (CSIRO)—has pursued open innovation to support business model–dynamic capabilities in an evolving publicly funded landscape. We reflect on the value of open innovation initiatives that have allowed the CSIRO to ambidextrously pursue world‐class science while achieving impact.Points for practitionersDynamic capabilities and business model innovation are strategic tools for publicly funded national science agencies seeking to seize the market in the mission.We examine a case of business model–dynamic capabilities in CSIRO.Open innovation has been important for CSIRO as part of an ambidextrous approach.