Tor Helge Aas

The impact of service innovation on firm-level financial performance

This article empirically investigates if firms focusing on service innovation perform better financially than firms not focusing on service innovation. Analysis of the financial performance of 3575 Norwegian firms in the manufacturing industries supports the proposition that firms focusing on service innovation have significantly higher growth of operating results than firms not focusing on service innovation. However, this proposition is not supported in a corresponding analysis of 1132 Norwegian firms in the service industries. We elaborate on these results by investigating a variety of performance measures and by comparing the effects of service innovation between manufacturing and service industries. The article contributes to the service innovation measurement literature and to a better general understanding of the determinants of service innovation performance effects.

THE FIRM-LEVEL EFFECTS OF SERVICE INNOVATION: A LITERATURE REVIEW

Despite the importance of service innovation, its effects have been given relatively little explicit attention in the extant literature. Instead, researchers often implicitly assume that firm-level service innovation activities result in a number of positive financial and other effects. This paper conducts a systematic review of literature on the firm-level effects of service innovation and attempts to identify and categorize the effects suggested in the literature. The review reveals a considerable number of potential firm-level service innovation effects that have been discussed in extant research. We suggest that they may be divided into five effect categories: (1) business process effects, (2) capability effects, (3) relationship effects, (4) financial performance effects and (5) competitiveness effects. The findings suggest directions for further research that aims to develop a causal model of service innovation effects.

Incentives and performance measures for open innovation practices

Purpose – To guarantee alignment between ongoing activities and organizational goals, innovation management theory emphasizes management control and explicit innovation strategies as prerequisites for innovation performance. However, the theory on open services innovation emphasizes individual autonomy and incentives to foster open innovations. The aim of this paper is to explore this inconsistency. Design/methodology/approach – An explorative research design involving 25 semi-structured interviews in five large scale-intensive service firms is explored. Scale-intensive service firms are strategically sampled for this study since these firms experience tension between open service innovation characteristics and efforts to standardize. Findings – The authors show how individual autonomy facilitates the internal and external networking required in open innovations. However, individualized incentives do not suffice to motivate, mobilize and direct the collaboration and collective effort needed to ensure succ...

Management control of service innovation activities: an exploratory investigation of best practice

This paper explores management control best practice related to service innovation activities. This is done by conducting qualitative in-depth interviews with managers in ten top performing firms that have an exceptional focus on service innovation. We found that the management control systems implemented for service innovation activities in these firms were simplistic, one-dimensional and predominated by financial measures. This means that the service innovation management control systems we identified were different from the management control systems that have been identified in empirical studies of product innovation best practice. The management control systems prescribed to product innovation management are multi-dimensional, relatively complex and are focusing both financial and non-financial measures. We suggest that further research should investigate if the management control practices identified in this paper should be recommended for service innovation activities, or if service innovation management may benefit from adopting management control systems based on those prescribed to product innovation management.

INNOVATION MANAGEMENT PRACTICES IN PRODUCTION-INTENSIVE SERVICE FIRMS

This paper posits that innovation management practices are contingent upon the type of industry, and examines the innovation management practices in a distinctive set of service firms: production-intensive service firms. Production-intensive services are standardised services produced at a large scale. These services have received little attention from prior comprehensive qualitative innovation management practices research. The examination in this paper is based on in-depth interviews with 21 key-employees in five large Scandinavian production-intensive service firms. The results revealed a number of innovation management practices specific to production-intensive service firms in the four dimensions of strategy and culture, front end of innovation and portfolio management, development process, as well as intellectual and organisational resources. The findings expose that production-intensive service firms are less likely to have an explicit innovation strategy and they are unlikely to measure the strategic impact of innovation activities. Furthermore, the innovation processes in production-intensive service firms tend to be flexible, although formal descriptions exist. The findings extend knowledge on innovation management practices research and provide useful lessons and implications for managers who seek to develop new production-intensive services. The findings also demonstrate that there is a need to acknowledge a contingent view of innovation management practices that are receptive to the type of context the innovation occur in.

The usefulness of componentization for specialized public service providers

Purpose – Componentization is a common approach in manufacturing that is suggested to lead to increased innovativeness at the firm level. Componentization has recently been given attention as a relevant approach for service providers. However, due to differences between services and manufactured products, and due to the diversity of the service sector, it is not obvious to what degree the application of componentization is relevant for all service providers. The purpose of this paper is to explore the usefulness of componentization for specialized service providers in the public sector. Design/methodology/approach – The paper applies an interventionist research design, in which the componentization approach is implemented in one case organization. Findings – The paper finds that componentization increases the service orientation of specialized public sector organizations (PSOs) and improves the ability of the top management to manage and control specialized PSOs. Perhaps most importantly, the paper determ...

Managing innovation of care services: An exploration of Norwegian municipalities

Abstract The social impact of care services provided by the public sector is significant. Nevertheless, these services have received relatively little attention from prior innovation management practices research. This paper addresses this gap by raising the question: What characterises management-driven innovation processes in public organisations providing care services? The qualitative exploration of this question is based on in-depth interviews with key managers in three Norwegian municipalities, and in-depth observation of one ongoing innovation initiative in one municipality. Our findings supplement the findings of prior research by showing that different actors are involved in different stages of management-driven innovation processes in care services and by showing that employee-based “bricolage” may be an integrated part of management-driven innovation processes in this sector. The findings provide both managerial implications and implications for further research.

Characteristics of Intrapreneurs in Scale-Intensive Service Firms

This empirical paper explores the work of employees in charge of service innovation when firms develop and launch new scale-intensive services by addressing two re- search questions: i) How do employees responsible for service innovation work? and ii) what are the related managerial implications when developing and launching new scale-intensive services? To this end, 21 qualitative, in-depth interviews were con- ducted with employees in five large scale-intensive service firms. The findings suggest that the involvement of internal professionals is an asset when new scale-intensive services are developed, and that internal professionals act as intrapreneurs when they are involved in the development of radically new scale-intensive services. This paper integrates understanding from the innovation management literature with knowledge of professionals from extant literature on professional service firms since we find that professionals in scale-intensive firms act as intrapreneurs. Thus, this pa- per extends the theory on determinants of innovation in scale-intensive service firms, blending insights from both findings and theory.

EXPLORING NEW SERVICE PORTFOLIO MANAGEMENT

Most research on the management of innovation portfolios has focused on new product portfolios, whereas the management of new service portfolios has not been researched correspondingly. This paper addresses this literature gap by exploring portfolio management of New Service Development (NSD) activities empirically. The paper applies a qualitative research design, where data was collected in 52 in-depth interviews with managers and employees involved with NSD. The study finds that the portfolio management activities and processes were carried out in parallel with the NSD process, and that the most important stakeholders in the NSD portfolio management organization were top managers not involved in the daily NSD operations. Findings reveal that the firms used a great variety of criteria when making portfolio decisions. However, contrary to prescriptions based on new product development research, the decision process exposed for NSD was to a limited degree assisted by explicit portfolio management tools. We explicate our findings in five propositions.

Conceptualizing innovation capabilities: A contingency perspective

Empirical research has confirmed that a positive relationship exists between the implementation of innovation activities and the future performance of organizations. Firms utilize resources and capabilities to develop innovations in the form of new products, services or processes. Some firms prove to be better at reproducing innovation success than others, and the capacity to do so is referred to as innovation capability. However, the term innovation capability is ambiguously treated in extant literature. There are several different definitions of the concept and the distinction between innovation capabilities and other types of capabilities, such as dynamic capabilities, is neither explicitly stated, nor is the relationship between the concept and other resource- and capability-based concepts within strategy theory established. Although innovation is increasingly identified as crucial for a firm’s sustainable competitiveness in contemporary volatile and complex markets, the strategy-innovation link is underdeveloped in extant research. To overcome this challenge this paper raises the following research question: What type of innovation capabilities are required to innovate successfully? Due to the status of the extant research, we chose a conceptual research design to answer our research question and the paper contributes with a conceptual framework to discuss what innovation capabilities firms need to reproduce innovation success. Based on careful examination of current literature on innovation capability specifically, and the strategy-innovation link in general, we suggest that innovation capability must be viewed along two dimensions – innovation novelty and market characteristics. This framework enables the identification of four different contexts for innovation capabilities in a two-bytwo matrix. We discuss the types of innovation capabilities necessary within the four different contexts. This novel framework contributes to the understanding of the strategy-innovation link as well as clarifies the conceptual understanding of capabilities within the strategy literature and establishes the relationship between these structures and innovation management theory.