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The Effect of Frontline Employee Co-creation on Service Innovation: Comparison of Manufacturing and Service Industries
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ScienceDirect Procedia - Social and Behavioral Sciences 224 (2016) 292 – 300
6th International Research Symposium in Service Management, IRSSM-6 2015, 11-15 August 2015, UiTM Sarawak, Kuching, Malaysia
The Effect of Frontline Employee Co-creation on Service Innovation: Comparison of Manufacturing and Service Industries Jung-Kuei Hsieh* National Taipei University, No. 151, University Road, San Shia District, New Taipei City 23741, Taiwan
Abstract The involvement of frontline employees is critical to successful service innovation. Frontline employees often know what their customers need as well as what types of services their firms offer. Service deliver is highly dependent on the actions of frontline employees, who are the focus of the current research. However, the understanding on the influences of co-creation with frontline employees on service innovation performance is insufficient. Therefore, the research model based on service-dominant logic and empowerment perspective was developed to investigate the effect of co-creation with frontline employees on the performance of service innovation. The results drawn from a survey of 149 IT firms and 103 finance firms suggest the followings. First, the frontline employee co-creation by two-way communication can facilitate frontline employees’ sentiment (i.e., motivation, commitment and satisfaction) for the implementation of new services in both the IT and financial industries. Second, for the IT industry, the frontline employees’ sentiment positively affects the financial performance and non-financial performance, except for the links of motivation–financial performance and commitment–non-financial performance. For the financial industry, the frontline employees’ sentiment positively affects the financial performance and non-financial performance, except for the commitment–financial performance. Third, the effects of satisfaction on financial and non-financial performance are stronger in the IT industry than the financial industry. The links of motivation–financial performance and commitment–non-financial performance are stronger in the financial industry than the IT industry. Finally, we offer some managerial and research implications for service innovation and frontline employee co-creation. © 2016 2016 The Published by by Elsevier Ltd.Ltd. This is an open access article under the CC BY-NC-ND license © TheAuthors. Authors. Published Elsevier (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review underresponsibility responsibility of Universiti TeknologiMARA M ARA Sarawak. Peer-review under of the Universiti Teknologi Sarawak Keywords: frontline employee; service innovation; service-dominant logic; co-creation
* Corresponding author. Tel.: +886-2-8674-1111; fax: +886-2-8671-5912. E-mail address: [email protected]
1877-0428 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the Universiti Teknologi MARA Sarawak doi:10.1016/j.sbspro.2016.05.488
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1. Introduction The challenge of service innovation is not only on how to design new services with innovativeness but also on how to manage and improve the process of execution (Cad wallader et al., 2010). To successfully translate innovation strategy into visible outcomes is highly dependent on the actions of the frontline emp loyee, who is the most important resource in the service firms (Cadwallader et al., 2010; Miles, 2005). Because there is no clear division of labor for service innovation such as R&D depart ment found in manufacturing for product innovation (Sundbo, 2010), it has been maintained that frontline emp loyees have a significant role in innovation processes in firms (Bessant, 2003). Frontline emp loyees can contribute to service innovation by their experiences which are accu mulated fro m day to-day interaction with customers (Karlsson et al., 2014). Therefore, the extent literature investigates the frontline emp loyees’ participation in innovation activities wh ich address the acquisition of knowledge and experience fro m the frontline emp loyees. Such studies relying on the vie wpoint of one-way information flow fro m the frontline emp loyees to firms might neglect the essence of co-creation—namely, dialogue. The crit ical feature of dialogue is interactivity between two stakeholders rather than only listening to one party (Prahalad and Ramaswamy, 2004). Considering mutual influences between parties in a co-creation relationship implies that interaction should be a two way form (Ballantyne and Varey, 2006). This study reframes the construct of co -creation by the perspective of dialogue that highlights the two-way communication. Prior studies assume that working closely with frontline employees can directly benefit service innovation (e.g., Ordanini and Parasuraman, 2011); however, they do not explore how the co -creat ion causes the changes of frontline emp loyees in facilitating service innovation. That is, few emp irical studies focus on the interaction processes from the value of co-creat ion perspective and this academic gap needs more exp lorat ions (Navarro et al., 2014). Based on the construct of co-creation, this study reconsiders the role of frontline emp loyees in the service innovation projects. Frontline emp loyees’ participation in service innovation can be viewed as a kind of employee empowerment to involve decision-making o f new services develop ment. Based on two-way co mmunication, not only frontline emp loyees can contribute their knowledge to service innovation projects but also their sentiment might be influenced. That is, through co-creation activities, businesses might get benefits from the frontline employees’ knowledge and experience in the design phase of service innovation and their devotion to fu lfill new services in the launch phase. The three co mponents of emp loyee sentiment wh ich are highlighted especially in this study include motivation, co mmit ment and satisfaction. Furthermore, this paper explo res these issues in the context of co mparison between manufacturing and service sectors because of the differences of industrial characteristics. 2. Literature review 2.1. Service innovation and frontline employee Service innovation is a sustainable way for companies to grow and develop competitive advantages (Chesbrough, 2011). While product innovation seems to be no longer providing an absolute advantage, companies can create v alue for customers through new service offerings, service processes, or service business models (Chesbrough, 2011; Ostrom et al., 2010). Nowadays, enterprises have to leverage their resources to provide better and new services for customers. For instance, the characteristic of inseparability (i.e., production and consumption at the same time) for service implies that frontline employees play a prominent role in the success of the service innovation (Abramovici and Bancel-Charensol, 2004). That is, frontline employee is the critical resource for the service innovation (Cadwallader et al., 2010). As innovation in service firms is rarely held by an independent department that dedicates to innovation processes (Gallouj, 2002), ideas of service innovations are often produced from the interaction encountered between customers and employees. Frontline employees contact customers directly, understand the customers’ needs and know what kinds of services their company can offer. Therefore, frontline employees can gene rate realizable, creative and customer-focused ideas for service innovation (Karlsson et al., 2014). The extent literature shows that the frontline employees’ participation can facilitate successful service innovation. For example, Melton and Hartline (201 0) demonstrated that the frontline employees’ involvement in new service development can increase service marketability and launch preparation of new services. Ordanini and Parasuraman (2011) found that collaboration with contact employees can be beneficial for the businesses’ innovation volume and radicals in the hotel industry. In short, frontline employee participation could nurture service innovation.
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2.2. Frontline employee sentiment and co-creation We know that employee-customer encounter is not only viewed as critical determinant for the perceived service quality from the tradition’s view of service management and marketing, but also viewed as a source for innovation in the service innovation field (Fuglsang, 2010). However, the extent literature add ressed on the acquisition of frontline employees’ knowledge and experience, and ignored that they take the critical roles in the delivery of new services. Frontline employees might deeply influence success of new services because of service delivery proces s being improved through frontline employees. From the empowerment viewpoint, employee involvement in the decision making process can increase their motivation, commit ment and satisfaction (Liu et al., 2007; Ugboro and Obeng, 2000; Zhang and Bartol, 2010). With the appeal of emp loyees empowerment, employee motivation, commit ment and satisfaction are the focuses that should be highlighted (Chang and Huang, 2010; Rafiq and Ahmed, 2000). The employee’s sentiment (i.e., motivation, commit ment and satisfaction) is confirmed as the determinant for the business performance (Bontis and Fitz-Enz, 2002). To arouse and maintain the enthusiasm of frontline emp loyees for new services might facilitate the implementation of new services. Therefore, it might be reasonable t o take human resource viewpoints into account to the formulation and imp lementation of frontline employee co -creation in service projects as to increase the employee’s sentiment. 3. Research model and hypotheses development The model depicted in Fig. 1 suggests that frontline employee co-creation influences three components of employee sentiment (i.e., motivation, commit ment and satisfaction), which in turn affects the performance of service innovation. The key constructs and the hypotheses follow next. Industry Sector Employee Motivation H1
Frontline Employee Co-creation
H2
H4a H4b
Employee Commitment
H5a
H8
Financial Performances of Service Innovation H7
H5b
H3
H6a Employee Satisfaction
H6b
Non-Financial Performances of Service Innovation
Fig. 1. Research model.
3.1. The effects of frontline employee co-creation on employee sentiment The service delivery of new services with greater innovativeness needs more intense interaction between service employees and customers (Stock, 2011). Therefore, frontline employees play very important role for new services with greater innovativeness. Co-creation can be treated as an approach for permitting frontline employees to have more influence over decisions that affect their work. For the frontline employees that intend to have more influences on how things get done, increase pride in their work or make greater use of their abilities, the co -creation programs provide an avenue for employees to be heard and realized. That is, if employees want to make a contribution to their firms, cocreation activities offer them an opportunity to do so. Co-creation can be viewed as a kind of employee empowerment participating in the decision making of new service development. Furthermore, Fernandez and Pitts (2011) assumed that empowerment can improve employee motivation. Harnesk (2004) found that building partnership with employees
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can increase their commitment. Ugboro and Obeng (2000) showed that employee empowerment can enhance the satisfaction. Accordingly, the following hypothesis is proposed. H1: The co-creation with frontline employees has a positive effect on the motivation of frontline employee for the implementation of new services. H2: The co-creation with frontline employees has a positive effect on the commit ment of frontline employees for the implementation of new services. H3: The co-creation with frontline employees has a positive effect on the satisfaction of frontline employees for the implementation of new services. 3.2. The effects of employee sentiment on performance of service innovation Frontline employees’ motivation to participate in the implementation of new services is important for the success of new service (Cadwallader et al., 2010). To accelerate the commercialization of new service, the incentives of frontline employees must be provided for the promotion and delivery of new services. Through the enhancement of motivation, employees can devote their efforts to new services and thus increase the performance of service innovation. Hence, we posit that: H4a: The motivation of frontline employee has a positive effect on the financial performance of service innovation. H4 b: The motivation of frontline employee has a positive effect on the non -financial performance of service innovation. 3.3. Commitment By co-creation process in which frontline employees could have more understanding with new services, managers assume that workers would become more committed to their jobs, thereby enhancing the performance of new services. If frontline employees approve and sanction new services, they will regard new services as interesting tasks rather than extra loadings. Furthermore, Malhotra and Mukherjee (2004) demonstrated that employees’ commit ment positively influences the service quality of frontline employees in the bank industry. Ellinger et al. (2013) showed that employees with commit ment toward service quality would have better job performance in the service industries. Hence, we posit that: H5a: The commit ment of frontline employee has a positive effect on the financial performance of service innovation. H5 b: The commit ment of frontline employee has a positive effect on the financial performance of service innovation. 3.4. Satisfaction Co-creation is a vehicle for promoting employee empowerment through visible changes within the organization. Co-creation programs can encourage frontline employees who want to have more influences on decision -making of service innovation projects. If frontline employees have more satisfaction toward the co-creation programs, they will have more support for the outcome of service innovation. Moreover, Malhotra and Mukherjee (2004) assumed that frontline employees’ satisfaction can enhance the service quality of frontline employees. Fernandez and Pitt s (2011) claimed that employees’ satisfaction has positively impact on innovation behavior. Therefore, the following hypotheses are proposed. H6a: The satisfaction of frontline employee has a positive effect on the financial performance of service innovation. H6 b: The satisfaction of frontline employee has a positive effect on the financial performance of service innovation. 3.5. Non-financial performance and financial performance Non-financial performance is a long-term business objective that highlights some items (e.g., customer loyalty, attracting new customers, and firm's reputation) non-existing in financial reports (Blazevic and Lievens, 2004). Chen et al. (2009) argued the positive relationship between non-financial performance and financial performance. Hence, we
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postulate the following: H7: The non-financial performance of service innovation has a positive effect on the financial performance of service innovation. 4. Research design and methodology 4.1. Sampling and data collection Data are co llected via a questionnaire survey. The IT industry and financial industry are chosen for the present study’s research samp le as they are representative of Taiwan’s businesses. The sample is drawn fro m Top 5000 Taiwan Large Enterp rise Ran kings by the Ch ina Cred it Information Serv ice Co mpany. We use the rando m sampling method to obtain the total samp le of 900 for the IT industry and 800 fo r the financial industry. The questionnaire with a returned envelope is sent to sales managers or service innovation project managers of these companies. We obtained a total o f 149 valid respondents fro m the IT industry and 103 valid respondents fro m the financial industry for the data analysis. 4.2. Measurement For the follo wing scale descriptions, unless noted otherwise, all measures use a 7-po int Likert-type scale where “1” represented strongly disagree and “7” corresponded to strongly agree. 4.2.1. Frontline employee co-creation As frontline emp loyee co-creation is a second order construct that includes informat ion co llection, in format ion delivery and continuousness, there are separate measures fo r the three sub-constructs respectively. Based on Chan, Yim, and Lam (2010)’s work, info rmat ion collect ion is measured by three items. Fu rthermore, in format ion delivery is measured by three items adapted from Auh et al. (2007). Finally , continuousness is measured by three items adapted from Gruner and Homburg (2000). 4.2.2. Employee sentiment There are three constructs in the concept of emp loyee sentiment. Emp loyee mot iva tion is measured using three items adapted fro m Hays and Hill’s (2001) and Bontis and Fit z-En z’s (2002) studies. Furthermo re, emp loyee commit ment is measured by three items of Shepherd and Mathews 's (2000) and Bontis and Fitz-En z’s (2002) works. Finally, e mp loyee satisfaction is measured using three items adapted from Turky ilmaz et al. (2011) and Bontis and Fitz-Enz (2002). 4.2.3. Performance of service innovation The financial and non-financial performance of service innovation are measured u sing six items adapted fro m van Riel et al. (2004) and Chen et al. (2009). 4.2.4. Control variables Three business characteristics are t reated as control variab les to account for possible significant confounding effects exogenous to the research model. W e fo llow suggestion by Chen et al. (2009) to include firm s ize, firm age, and firm capital as control variables for this study. 5. Data analysis In order to test the research model, the present study uses the structural equation modeling (SEM) approach to analyze the collected data. We followed the two-step approach suggested by Anderson and Gerbing (1988) to analyze the data and apply partial least squares (PLS) using SmartPLS 2.0 (Ringle et al., 2005) as to assess the
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psychometric properties of scale and the structural model. 5.1. Reliability and validity Cronbach’s alpha values range from .89 to .95 for the 6 constructs of IT industry and from .82 to .91 for the 6 constructs of financial industry. The values are all above 0.70, revealing the high internal consistency of each construct (Hair et al., 2006). The convergent validity of the scales is verified using the two criteria suggested by Fornell and Larcker (1981). The factor loadings of the CFA are all larger than .89 for IT industry and .80 for financial industry that met the first criterion, and the values of AVE are all larger than .70 fo r IT industry and .58 for financial industry that met the second criterion. Thus, we find support for a convergent validity. Furthermore, the square root of the A VE fro m the construct is greater than the correlation shared between the construct and other constructs in the model (Fornell and Larcker, 1981)(see Table 1). Discriminant validity is satisfactory in this study. T able 1. Correlations and square root of AVE. IT industry Finance industry Construct (i1) (i2) (i3) (i4) (i5) (i6) (f1) (f2) (f3) (f4) (f5) (f6) FEC (i1) (f1) 0.84 0.76 EM (i2) 0.64 (f2) 0.59 0.93 0.90 EC (i3) 0.66 0.73 (f3) 0.69 0.66 0.92 0.91 ES (i4) 0.56 0.64 0.58 (f4) 0.61 0.51 0.49 0.94 0.91 FP (i5) 0.48 0.54 0.54 0.73 (f5) 0.62 0.69 0.65 0.58 0.92 0.88 NFP (i6) 0.46 0.57 0.45 0.66 0.74 (f6) 0.63 0.61 0.70 0.57 0.74 0.91 0.86 Note: 1. Values on the diagonal represent the square root of the average variance extracted (AVE) 2. FEC = Frontline Employee Co-creation; EM = Employee Motivation; EC = Employee Commitment; ES = Employee Satisfaction; FP = Financial Performance of service innovation; NFP = Non-Financial Performance of service innovation.
5.2. Hypotheses testing A bootstrapping technique with 500 runs is used to determine the significance of the structural paths in this study. The results show that frontline employee co-creation is positively related to employee sentiment (i.e., motivation, commit ment, and satisfaction) for both the IT industry and financial industry. Therefore, H1, H2 and H3 are supported. Furthermore, the results of the PLS analysis demonstrated the influences of three employee sentiment constructs on two types of performance of service innovation. Motivation is positively related to the financial performance and non financial performance of service innovation for financial industry but only related to non -financial performance for IT industry. Thus, H4b is supported for both the IT industry and financial industry, but H4a is only supported for the financial industry. Commit ment is positively related to the financial performance of service innovation only for the IT industry and related to non-financial performance of service innovation only for the financial industry. Hence, H5a is only supported for the IT industry and H5b is only supported for the financial industry. In addition, satisfaction is positively related to the financial performance of service innovation and non -financial performance of service innovation for both the IT industry and financial industry. Therefore, H6a a nd H6b are supported for both the IT industry and financial industry. The results show that non -financial performance of service innovation is positively related to the financial performance of service innovation. That is, H7 is supported for both the IT industry and financial industry. The results of the hypotheses testing have been summarized in Table 2. T able 2. Summary of hypotheses testing. Path/Hypothesis Co-creation → Motivation (H1) Co-creation → Commitment (H2) Co-creation → Satisfaction (H3) Motivation → Financial Performance (H4a) Motivation → Non-Financial Performance (H4b) Commitment → Financial Performance (H5a) Commitment → Non-Financial Performance (H5b) Satisfaction → Financial Performance (H6a) Satisfaction → Non-Financial Performance (H6b) Non-Financial Performance → Financial Performance (H7)
IT industry t-value 13.80*** 14.08*** 10.87*** 1.58 2.39* 2.05* 0.71 4.35*** 5.63*** 5.67***
Hypothesis Supported Yes Yes Yes No Yes Yes No Yes Yes Yes
Financial Industry t-value Hypothesis Supported 5.61*** Yes 9.41*** Yes 7.89*** Yes 3.70*** Yes 2.20* Yes 1.09 No 4.90*** Yes 2.02* Yes 2.67** Yes 4.79*** Yes
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Finally, the results of moderating test are shown in Table 3. The effect of emp loyee motivation on financial performance of service innovation and the effect of emp loyee commit ment on non -financial performance of service innovation are stronger in the finance industry than in the IT industry. The effect of employee satisfaction on non financial performance of service innovation is stronger in the IT industry than the financial industry. T able 3. Moderating test (H8) of industry sectors. Path Motivation→Finance Motivation→Non-Finance Commitment→Finance Commitment→Non-Finance Satisfaction→Finance Satisfaction→Non-Finance
IT industry (N=149) Coefficient -.139 .276 .200 -.059 .403 .516
Std. err .088 .115 .098 .082 .092 .092
Financial Industry (N=103) Coefficient .295 .207 .069 .441 .162 .214
Results Std. err .080 .094 .063 .090 .080 .080
t-value -3.48*** .43 1.01 -4.05*** 1.87 2.34*
Significant Yes No No Yes Marginally Yes
6. Discussion To address the success of service innovation, this study integrates the concept of co -creation in S-D logic with employee sentiment into a theoretical model. Through the empirical test, the findings support that there are three components of employee sentiment which are important determinants for service innovation and confirm that frontline employee co-creation can enhance these components. More specifically, this study contributes to demonstrate the similarities and differences of service innovation between manufacturing and service industries. 6.1. Theoretical contributions To explain and predict key antecedents of service innovation are important and they are interesting topics for academics. The findings identify important implications that benefit service innovation research in several ways. First, this study confirms the positive effects of co-creation with frontline employees on three components of employee sentiment. The critical ro le of frontline employees in service innovation projects have received much attention (Fuglsang, 2010). However, most existing studies pertaining to frontline employees’ participation focus on knowledge acquisition from employees and ignore the psychological influences for employees in the co-creation process (e.g., Melton and Hartline, 2010). This study addresses on the perspective of human resource and finds that the motivation, commit ment and satisfaction of frontline employees can be enhanced in the co-creation process. In addition, the findings demonstrate that not only co-creation with frontline employees in the financial industry (service) can affect employees’ sentiment but also there is similar effect of co-creation in the IT industry (manufacturing). Second, this study verifies the positive effects of employee sentiment on the performance of service innovation. For the IT industry, the frontline employees’ sentiment has positively affected the financial performance and non -financial performance, except for the links of motivation–financial performance and commitment–non-financial performance. For the financial industry, the frontline employees’ sentiment has positively affected the financial performance and non-financial performance, e xcept for the commit ment–financial performance. This finding confirms that employee motivation, commitment and satisfaction can be the determinants for the financial and non -financial performance of service innovation. Employee satisfaction, especially, is the most prominent determinant for the performance in both IT and financial industries. Third, this study finds that the effects of satisfaction on financial and non -financial performance are stronger in the IT industry than the financial industry. The findings imply that IT industries’ frontline employees with satisfaction during co-creation process will strongly facilitate the delivery of new services. Furthermore, the links of motivation – financial performance and commitment–non-financial performance are stronger in the financial industry than the IT industry. The findings might imp ly that service innovation of financial industry is strongly driven by frontline employees’ motivation and commitment. 6.2. Managerial implications
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This study calls on practitioners to consider the role of frontline employees in realizing the value of co -creation and how to effectively co-create with frontline employees to achieve service innovation. The findings suggest that the co creation with frontline employees is not only to obtain feedback from them, but also to influence them during the co creation process. The firms that plan to develop service innovation could adopt the co -creation approach through a consecutive form (i.e. from pre-commercialization to post-commercialization) in order to interact with frontline employee. More specifically, practitioners could use the scale of this study to review their co -creation relationships with the frontline employees. They could check the status of this relationship, including the frontline employees’ participation, the communication of information delivery for employees, and whether there is continuous interaction with frontline employees. Through such a comprehensive inspection of co -creation relationships with frontline employees, practitioners could identify weaknesses in co-creation relationships and thus, develop business strategies or policies to enhance co-creation activities to benefit service innovation projects. Finally, the findings suggest that service managers should pay more attention to frontline employees’ perceptions during service innovation process. To deeply cooperate with frontline employees and carefully respond to employees’ feedback, it might be helpful to increase their satisfaction and commit ment towards new services, and further enhanced their motivation to deliver new services well. 7. Limitations and future research We acknowledge several limitations of this study and the fact that there is much work yet to be done in the service innovation field. 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Jung-Kuei Hsieh / Procedia - Social and Behavioral Sciences 224 (2016) 292 – 300 Fuglsang, L. (2010), “ Bricolage and invisible innovation in public service innovation”, Jo urnal of Innovation Economics & Management, Vol. 5 No. 1, pp. 67-87. Gallouj, F. (2002), Innovation in the service economy: The new wealth of nations, Edward Elgar Publishing, Cheltenham. Gruner, K.E. and Homburg, C. (2000), “Does customer interaction enhance new product success?”, Journal of Business Research, Vol. 49 No. 1, pp. 1-14. Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and T atham, R.L. (2006), Multivariate data analysis, 6th, Pearson Prenti ce Hall, Upper Saddle River, New Jersey. Harnesk, R. (2004), “Partnership with internal customers-a way to achieve increased commitment”, The TQM Magazine, Vol. 16 No. 1, pp. 26 32. Hays, J.M. and Hill, A.V. (2001), “A preliminary investigation of the relationships between employee motivation/vision, service learning, and perceived service quality”, Journal of Operations Management, Vol. 19 No. 3, pp. 335 -349. Karlsson, J., Skålén, P. and Sundström, E. (2014), “How frontline employees nurture service innovation through co -creation with their customers”, in Fuglsang, L., Rønning, R. and Enquist, B. (Eds.), Framing innovation in public sector services, Taylor & Francis, New York, NY, pp. 18. Liu, A.M., Chiu, W. and Fellows, R. (2007), “Enhancing commitment through work empowerment”, Engineering, Construction and Architectural Management, Vol. 14 No. 6, pp. 568-580. Malhotra, N. and Mukherjee, A. (2004), “The relative influence of organisational commitment and job satisfaction on service quality of customer-contact employees in banking call centres”, Journal of Services Marketing, Vol. 18 No. 3, pp. 162-174. Melton, H.L. and Hartline, M.D. (2010), “ Customer and frontline employee influence on new service development performance”, Journal of Service Research, Vol. 13 No. 4, pp. 411-425. Miles, I. (2005), “Innovation in services”, in The oxford handbook of innovation, Oxford University Press, pp. 433-458. Navarro, S., Andreu, L. and Cervera, A. (2014), “ Value co-creation among hotels and disabled customers: An exploratory study”, Journal of Business Research, Vol. forthcoming. Ordanini, A. and Parasuraman, A. (2011), “ Service innovation viewed through a service-dominant logic lens: A conceptual framework and empirical analysis”, Journal of Service Research, Vol. 14 No. 1, pp. 3 -23. Ostrom, A.L., Bitner, M.J., Brown, S.W., Burkhard, K.A., Goul, M., Smith-Daniels, V., Demirkan, H. and Rabinovich, E. (2010), “ Moving forward and making a difference: Research priorities for the science of service”, Journal of Service Research, Vol. 13 No. 1, pp. 4-36. Prahalad, C.K. and Ramaswamy, V. (2004), “ Co-creating unique value with customers”, Strategy & Leadership, Vol. 32 No. 3, pp. 4 -9. Rafiq, M. and Ahmed, P.K. (2000), “Advances in the internal marketing concept: Definition, synthesis and extension”, Journal of Services Marketing, Vol. 14 No. 6, pp. 449-462. Ringle, C.M., Wende, S. and Will, A. (2005), “ Smartpls 2.0.M3”, available at: http://www.smartpls.de (accessed Jan 31, 2014). Shepherd, J.L. and Mathews, B.P. (2000), “Employee commitment: Academic vs practitioner perspectives”, Employee Relations, Vo l. 22 No. 6, pp. 555-575. Stock, R.M. (2011), “ How does product program innovativeness affect customer satisfaction? A comparison of goods and services”, Journal of the Academy of Marketing Science, Vol. 39 No. 6, pp. 813-827. Sundbo, J. (2010), “The toilsome path of service innovation: The effects of the law of low human multi-task capability”, in Gallouj, F. and Djellal, F. (Eds.), T he handbook of innovation and services, Edward Elgar, London. T urkyilmaz, A., Akman, G., Ozkan, C. and Pastuszak, Z. (2011), “Empirical study of public sector employee loyalty and satisfa ction”, Industrial Management & Data Systems, Vol. 111 No. 5, pp. 675-696. Ugboro, I.O. and Obeng, K. (2000), “Top management leadership, employee empowerment, job satisfaction, and customer satisfact ion in tqm organizations: An empirical study”, Journal of Quality Management, Vol. 5 No. 2, pp. 247 -272. van Riel, A.C.R., Lemmink, J. and Ouwersloot, H. (2004), “High-technology service innovation success: A decision-making perspective”, Journal of Product Innovation Management, Vol. 21 No. 5, pp. 348-359. Zhang, X. and Bartol, K.M. (2010), “Linking empowering leadership and employee creativity: The influence of psychological empowerment, intrinsic motivation, and creative process engagement”, Academy of Management Journal, Vol. 53 No. 1, pp. 107-128.
ScienceDirect Procedia - Social and Behavioral Sciences 224 (2016) 292 – 300
6th International Research Symposium in Service Management, IRSSM-6 2015, 11-15 August 2015, UiTM Sarawak, Kuching, Malaysia
The Effect of Frontline Employee Co-creation on Service Innovation: Comparison of Manufacturing and Service Industries Jung-Kuei Hsieh* National Taipei University, No. 151, University Road, San Shia District, New Taipei City 23741, Taiwan
Abstract The involvement of frontline employees is critical to successful service innovation. Frontline employees often know what their customers need as well as what types of services their firms offer. Service deliver is highly dependent on the actions of frontline employees, who are the focus of the current research. However, the understanding on the influences of co-creation with frontline employees on service innovation performance is insufficient. Therefore, the research model based on service-dominant logic and empowerment perspective was developed to investigate the effect of co-creation with frontline employees on the performance of service innovation. The results drawn from a survey of 149 IT firms and 103 finance firms suggest the followings. First, the frontline employee co-creation by two-way communication can facilitate frontline employees’ sentiment (i.e., motivation, commitment and satisfaction) for the implementation of new services in both the IT and financial industries. Second, for the IT industry, the frontline employees’ sentiment positively affects the financial performance and non-financial performance, except for the links of motivation–financial performance and commitment–non-financial performance. For the financial industry, the frontline employees’ sentiment positively affects the financial performance and non-financial performance, except for the commitment–financial performance. Third, the effects of satisfaction on financial and non-financial performance are stronger in the IT industry than the financial industry. The links of motivation–financial performance and commitment–non-financial performance are stronger in the financial industry than the IT industry. Finally, we offer some managerial and research implications for service innovation and frontline employee co-creation. © 2016 2016 The Published by by Elsevier Ltd.Ltd. This is an open access article under the CC BY-NC-ND license © TheAuthors. Authors. Published Elsevier (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review underresponsibility responsibility of Universiti TeknologiMARA M ARA Sarawak. Peer-review under of the Universiti Teknologi Sarawak Keywords: frontline employee; service innovation; service-dominant logic; co-creation
* Corresponding author. Tel.: +886-2-8674-1111; fax: +886-2-8671-5912. E-mail address: [email protected]
1877-0428 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the Universiti Teknologi MARA Sarawak doi:10.1016/j.sbspro.2016.05.488
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1. Introduction The challenge of service innovation is not only on how to design new services with innovativeness but also on how to manage and improve the process of execution (Cad wallader et al., 2010). To successfully translate innovation strategy into visible outcomes is highly dependent on the actions of the frontline emp loyee, who is the most important resource in the service firms (Cadwallader et al., 2010; Miles, 2005). Because there is no clear division of labor for service innovation such as R&D depart ment found in manufacturing for product innovation (Sundbo, 2010), it has been maintained that frontline emp loyees have a significant role in innovation processes in firms (Bessant, 2003). Frontline emp loyees can contribute to service innovation by their experiences which are accu mulated fro m day to-day interaction with customers (Karlsson et al., 2014). Therefore, the extent literature investigates the frontline emp loyees’ participation in innovation activities wh ich address the acquisition of knowledge and experience fro m the frontline emp loyees. Such studies relying on the vie wpoint of one-way information flow fro m the frontline emp loyees to firms might neglect the essence of co-creation—namely, dialogue. The crit ical feature of dialogue is interactivity between two stakeholders rather than only listening to one party (Prahalad and Ramaswamy, 2004). Considering mutual influences between parties in a co-creation relationship implies that interaction should be a two way form (Ballantyne and Varey, 2006). This study reframes the construct of co -creation by the perspective of dialogue that highlights the two-way communication. Prior studies assume that working closely with frontline employees can directly benefit service innovation (e.g., Ordanini and Parasuraman, 2011); however, they do not explore how the co -creat ion causes the changes of frontline emp loyees in facilitating service innovation. That is, few emp irical studies focus on the interaction processes from the value of co-creat ion perspective and this academic gap needs more exp lorat ions (Navarro et al., 2014). Based on the construct of co-creation, this study reconsiders the role of frontline emp loyees in the service innovation projects. Frontline emp loyees’ participation in service innovation can be viewed as a kind of employee empowerment to involve decision-making o f new services develop ment. Based on two-way co mmunication, not only frontline emp loyees can contribute their knowledge to service innovation projects but also their sentiment might be influenced. That is, through co-creation activities, businesses might get benefits from the frontline employees’ knowledge and experience in the design phase of service innovation and their devotion to fu lfill new services in the launch phase. The three co mponents of emp loyee sentiment wh ich are highlighted especially in this study include motivation, co mmit ment and satisfaction. Furthermore, this paper explo res these issues in the context of co mparison between manufacturing and service sectors because of the differences of industrial characteristics. 2. Literature review 2.1. Service innovation and frontline employee Service innovation is a sustainable way for companies to grow and develop competitive advantages (Chesbrough, 2011). While product innovation seems to be no longer providing an absolute advantage, companies can create v alue for customers through new service offerings, service processes, or service business models (Chesbrough, 2011; Ostrom et al., 2010). Nowadays, enterprises have to leverage their resources to provide better and new services for customers. For instance, the characteristic of inseparability (i.e., production and consumption at the same time) for service implies that frontline employees play a prominent role in the success of the service innovation (Abramovici and Bancel-Charensol, 2004). That is, frontline employee is the critical resource for the service innovation (Cadwallader et al., 2010). As innovation in service firms is rarely held by an independent department that dedicates to innovation processes (Gallouj, 2002), ideas of service innovations are often produced from the interaction encountered between customers and employees. Frontline employees contact customers directly, understand the customers’ needs and know what kinds of services their company can offer. Therefore, frontline employees can gene rate realizable, creative and customer-focused ideas for service innovation (Karlsson et al., 2014). The extent literature shows that the frontline employees’ participation can facilitate successful service innovation. For example, Melton and Hartline (201 0) demonstrated that the frontline employees’ involvement in new service development can increase service marketability and launch preparation of new services. Ordanini and Parasuraman (2011) found that collaboration with contact employees can be beneficial for the businesses’ innovation volume and radicals in the hotel industry. In short, frontline employee participation could nurture service innovation.
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2.2. Frontline employee sentiment and co-creation We know that employee-customer encounter is not only viewed as critical determinant for the perceived service quality from the tradition’s view of service management and marketing, but also viewed as a source for innovation in the service innovation field (Fuglsang, 2010). However, the extent literature add ressed on the acquisition of frontline employees’ knowledge and experience, and ignored that they take the critical roles in the delivery of new services. Frontline employees might deeply influence success of new services because of service delivery proces s being improved through frontline employees. From the empowerment viewpoint, employee involvement in the decision making process can increase their motivation, commit ment and satisfaction (Liu et al., 2007; Ugboro and Obeng, 2000; Zhang and Bartol, 2010). With the appeal of emp loyees empowerment, employee motivation, commit ment and satisfaction are the focuses that should be highlighted (Chang and Huang, 2010; Rafiq and Ahmed, 2000). The employee’s sentiment (i.e., motivation, commit ment and satisfaction) is confirmed as the determinant for the business performance (Bontis and Fitz-Enz, 2002). To arouse and maintain the enthusiasm of frontline emp loyees for new services might facilitate the implementation of new services. Therefore, it might be reasonable t o take human resource viewpoints into account to the formulation and imp lementation of frontline employee co -creation in service projects as to increase the employee’s sentiment. 3. Research model and hypotheses development The model depicted in Fig. 1 suggests that frontline employee co-creation influences three components of employee sentiment (i.e., motivation, commit ment and satisfaction), which in turn affects the performance of service innovation. The key constructs and the hypotheses follow next. Industry Sector Employee Motivation H1
Frontline Employee Co-creation
H2
H4a H4b
Employee Commitment
H5a
H8
Financial Performances of Service Innovation H7
H5b
H3
H6a Employee Satisfaction
H6b
Non-Financial Performances of Service Innovation
Fig. 1. Research model.
3.1. The effects of frontline employee co-creation on employee sentiment The service delivery of new services with greater innovativeness needs more intense interaction between service employees and customers (Stock, 2011). Therefore, frontline employees play very important role for new services with greater innovativeness. Co-creation can be treated as an approach for permitting frontline employees to have more influence over decisions that affect their work. For the frontline employees that intend to have more influences on how things get done, increase pride in their work or make greater use of their abilities, the co -creation programs provide an avenue for employees to be heard and realized. That is, if employees want to make a contribution to their firms, cocreation activities offer them an opportunity to do so. Co-creation can be viewed as a kind of employee empowerment participating in the decision making of new service development. Furthermore, Fernandez and Pitts (2011) assumed that empowerment can improve employee motivation. Harnesk (2004) found that building partnership with employees
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can increase their commitment. Ugboro and Obeng (2000) showed that employee empowerment can enhance the satisfaction. Accordingly, the following hypothesis is proposed. H1: The co-creation with frontline employees has a positive effect on the motivation of frontline employee for the implementation of new services. H2: The co-creation with frontline employees has a positive effect on the commit ment of frontline employees for the implementation of new services. H3: The co-creation with frontline employees has a positive effect on the satisfaction of frontline employees for the implementation of new services. 3.2. The effects of employee sentiment on performance of service innovation Frontline employees’ motivation to participate in the implementation of new services is important for the success of new service (Cadwallader et al., 2010). To accelerate the commercialization of new service, the incentives of frontline employees must be provided for the promotion and delivery of new services. Through the enhancement of motivation, employees can devote their efforts to new services and thus increase the performance of service innovation. Hence, we posit that: H4a: The motivation of frontline employee has a positive effect on the financial performance of service innovation. H4 b: The motivation of frontline employee has a positive effect on the non -financial performance of service innovation. 3.3. Commitment By co-creation process in which frontline employees could have more understanding with new services, managers assume that workers would become more committed to their jobs, thereby enhancing the performance of new services. If frontline employees approve and sanction new services, they will regard new services as interesting tasks rather than extra loadings. Furthermore, Malhotra and Mukherjee (2004) demonstrated that employees’ commit ment positively influences the service quality of frontline employees in the bank industry. Ellinger et al. (2013) showed that employees with commit ment toward service quality would have better job performance in the service industries. Hence, we posit that: H5a: The commit ment of frontline employee has a positive effect on the financial performance of service innovation. H5 b: The commit ment of frontline employee has a positive effect on the financial performance of service innovation. 3.4. Satisfaction Co-creation is a vehicle for promoting employee empowerment through visible changes within the organization. Co-creation programs can encourage frontline employees who want to have more influences on decision -making of service innovation projects. If frontline employees have more satisfaction toward the co-creation programs, they will have more support for the outcome of service innovation. Moreover, Malhotra and Mukherjee (2004) assumed that frontline employees’ satisfaction can enhance the service quality of frontline employees. Fernandez and Pitt s (2011) claimed that employees’ satisfaction has positively impact on innovation behavior. Therefore, the following hypotheses are proposed. H6a: The satisfaction of frontline employee has a positive effect on the financial performance of service innovation. H6 b: The satisfaction of frontline employee has a positive effect on the financial performance of service innovation. 3.5. Non-financial performance and financial performance Non-financial performance is a long-term business objective that highlights some items (e.g., customer loyalty, attracting new customers, and firm's reputation) non-existing in financial reports (Blazevic and Lievens, 2004). Chen et al. (2009) argued the positive relationship between non-financial performance and financial performance. Hence, we
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postulate the following: H7: The non-financial performance of service innovation has a positive effect on the financial performance of service innovation. 4. Research design and methodology 4.1. Sampling and data collection Data are co llected via a questionnaire survey. The IT industry and financial industry are chosen for the present study’s research samp le as they are representative of Taiwan’s businesses. The sample is drawn fro m Top 5000 Taiwan Large Enterp rise Ran kings by the Ch ina Cred it Information Serv ice Co mpany. We use the rando m sampling method to obtain the total samp le of 900 for the IT industry and 800 fo r the financial industry. The questionnaire with a returned envelope is sent to sales managers or service innovation project managers of these companies. We obtained a total o f 149 valid respondents fro m the IT industry and 103 valid respondents fro m the financial industry for the data analysis. 4.2. Measurement For the follo wing scale descriptions, unless noted otherwise, all measures use a 7-po int Likert-type scale where “1” represented strongly disagree and “7” corresponded to strongly agree. 4.2.1. Frontline employee co-creation As frontline emp loyee co-creation is a second order construct that includes informat ion co llection, in format ion delivery and continuousness, there are separate measures fo r the three sub-constructs respectively. Based on Chan, Yim, and Lam (2010)’s work, info rmat ion collect ion is measured by three items. Fu rthermore, in format ion delivery is measured by three items adapted from Auh et al. (2007). Finally , continuousness is measured by three items adapted from Gruner and Homburg (2000). 4.2.2. Employee sentiment There are three constructs in the concept of emp loyee sentiment. Emp loyee mot iva tion is measured using three items adapted fro m Hays and Hill’s (2001) and Bontis and Fit z-En z’s (2002) studies. Furthermo re, emp loyee commit ment is measured by three items of Shepherd and Mathews 's (2000) and Bontis and Fitz-En z’s (2002) works. Finally, e mp loyee satisfaction is measured using three items adapted from Turky ilmaz et al. (2011) and Bontis and Fitz-Enz (2002). 4.2.3. Performance of service innovation The financial and non-financial performance of service innovation are measured u sing six items adapted fro m van Riel et al. (2004) and Chen et al. (2009). 4.2.4. Control variables Three business characteristics are t reated as control variab les to account for possible significant confounding effects exogenous to the research model. W e fo llow suggestion by Chen et al. (2009) to include firm s ize, firm age, and firm capital as control variables for this study. 5. Data analysis In order to test the research model, the present study uses the structural equation modeling (SEM) approach to analyze the collected data. We followed the two-step approach suggested by Anderson and Gerbing (1988) to analyze the data and apply partial least squares (PLS) using SmartPLS 2.0 (Ringle et al., 2005) as to assess the
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psychometric properties of scale and the structural model. 5.1. Reliability and validity Cronbach’s alpha values range from .89 to .95 for the 6 constructs of IT industry and from .82 to .91 for the 6 constructs of financial industry. The values are all above 0.70, revealing the high internal consistency of each construct (Hair et al., 2006). The convergent validity of the scales is verified using the two criteria suggested by Fornell and Larcker (1981). The factor loadings of the CFA are all larger than .89 for IT industry and .80 for financial industry that met the first criterion, and the values of AVE are all larger than .70 fo r IT industry and .58 for financial industry that met the second criterion. Thus, we find support for a convergent validity. Furthermore, the square root of the A VE fro m the construct is greater than the correlation shared between the construct and other constructs in the model (Fornell and Larcker, 1981)(see Table 1). Discriminant validity is satisfactory in this study. T able 1. Correlations and square root of AVE. IT industry Finance industry Construct (i1) (i2) (i3) (i4) (i5) (i6) (f1) (f2) (f3) (f4) (f5) (f6) FEC (i1) (f1) 0.84 0.76 EM (i2) 0.64 (f2) 0.59 0.93 0.90 EC (i3) 0.66 0.73 (f3) 0.69 0.66 0.92 0.91 ES (i4) 0.56 0.64 0.58 (f4) 0.61 0.51 0.49 0.94 0.91 FP (i5) 0.48 0.54 0.54 0.73 (f5) 0.62 0.69 0.65 0.58 0.92 0.88 NFP (i6) 0.46 0.57 0.45 0.66 0.74 (f6) 0.63 0.61 0.70 0.57 0.74 0.91 0.86 Note: 1. Values on the diagonal represent the square root of the average variance extracted (AVE) 2. FEC = Frontline Employee Co-creation; EM = Employee Motivation; EC = Employee Commitment; ES = Employee Satisfaction; FP = Financial Performance of service innovation; NFP = Non-Financial Performance of service innovation.
5.2. Hypotheses testing A bootstrapping technique with 500 runs is used to determine the significance of the structural paths in this study. The results show that frontline employee co-creation is positively related to employee sentiment (i.e., motivation, commit ment, and satisfaction) for both the IT industry and financial industry. Therefore, H1, H2 and H3 are supported. Furthermore, the results of the PLS analysis demonstrated the influences of three employee sentiment constructs on two types of performance of service innovation. Motivation is positively related to the financial performance and non financial performance of service innovation for financial industry but only related to non -financial performance for IT industry. Thus, H4b is supported for both the IT industry and financial industry, but H4a is only supported for the financial industry. Commit ment is positively related to the financial performance of service innovation only for the IT industry and related to non-financial performance of service innovation only for the financial industry. Hence, H5a is only supported for the IT industry and H5b is only supported for the financial industry. In addition, satisfaction is positively related to the financial performance of service innovation and non -financial performance of service innovation for both the IT industry and financial industry. Therefore, H6a a nd H6b are supported for both the IT industry and financial industry. The results show that non -financial performance of service innovation is positively related to the financial performance of service innovation. That is, H7 is supported for both the IT industry and financial industry. The results of the hypotheses testing have been summarized in Table 2. T able 2. Summary of hypotheses testing. Path/Hypothesis Co-creation → Motivation (H1) Co-creation → Commitment (H2) Co-creation → Satisfaction (H3) Motivation → Financial Performance (H4a) Motivation → Non-Financial Performance (H4b) Commitment → Financial Performance (H5a) Commitment → Non-Financial Performance (H5b) Satisfaction → Financial Performance (H6a) Satisfaction → Non-Financial Performance (H6b) Non-Financial Performance → Financial Performance (H7)
IT industry t-value 13.80*** 14.08*** 10.87*** 1.58 2.39* 2.05* 0.71 4.35*** 5.63*** 5.67***
Hypothesis Supported Yes Yes Yes No Yes Yes No Yes Yes Yes
Financial Industry t-value Hypothesis Supported 5.61*** Yes 9.41*** Yes 7.89*** Yes 3.70*** Yes 2.20* Yes 1.09 No 4.90*** Yes 2.02* Yes 2.67** Yes 4.79*** Yes
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Finally, the results of moderating test are shown in Table 3. The effect of emp loyee motivation on financial performance of service innovation and the effect of emp loyee commit ment on non -financial performance of service innovation are stronger in the finance industry than in the IT industry. The effect of employee satisfaction on non financial performance of service innovation is stronger in the IT industry than the financial industry. T able 3. Moderating test (H8) of industry sectors. Path Motivation→Finance Motivation→Non-Finance Commitment→Finance Commitment→Non-Finance Satisfaction→Finance Satisfaction→Non-Finance
IT industry (N=149) Coefficient -.139 .276 .200 -.059 .403 .516
Std. err .088 .115 .098 .082 .092 .092
Financial Industry (N=103) Coefficient .295 .207 .069 .441 .162 .214
Results Std. err .080 .094 .063 .090 .080 .080
t-value -3.48*** .43 1.01 -4.05*** 1.87 2.34*
Significant Yes No No Yes Marginally Yes
6. Discussion To address the success of service innovation, this study integrates the concept of co -creation in S-D logic with employee sentiment into a theoretical model. Through the empirical test, the findings support that there are three components of employee sentiment which are important determinants for service innovation and confirm that frontline employee co-creation can enhance these components. More specifically, this study contributes to demonstrate the similarities and differences of service innovation between manufacturing and service industries. 6.1. Theoretical contributions To explain and predict key antecedents of service innovation are important and they are interesting topics for academics. The findings identify important implications that benefit service innovation research in several ways. First, this study confirms the positive effects of co-creation with frontline employees on three components of employee sentiment. The critical ro le of frontline employees in service innovation projects have received much attention (Fuglsang, 2010). However, most existing studies pertaining to frontline employees’ participation focus on knowledge acquisition from employees and ignore the psychological influences for employees in the co-creation process (e.g., Melton and Hartline, 2010). This study addresses on the perspective of human resource and finds that the motivation, commit ment and satisfaction of frontline employees can be enhanced in the co-creation process. In addition, the findings demonstrate that not only co-creation with frontline employees in the financial industry (service) can affect employees’ sentiment but also there is similar effect of co-creation in the IT industry (manufacturing). Second, this study verifies the positive effects of employee sentiment on the performance of service innovation. For the IT industry, the frontline employees’ sentiment has positively affected the financial performance and non -financial performance, except for the links of motivation–financial performance and commitment–non-financial performance. For the financial industry, the frontline employees’ sentiment has positively affected the financial performance and non-financial performance, e xcept for the commit ment–financial performance. This finding confirms that employee motivation, commitment and satisfaction can be the determinants for the financial and non -financial performance of service innovation. Employee satisfaction, especially, is the most prominent determinant for the performance in both IT and financial industries. Third, this study finds that the effects of satisfaction on financial and non -financial performance are stronger in the IT industry than the financial industry. The findings imply that IT industries’ frontline employees with satisfaction during co-creation process will strongly facilitate the delivery of new services. Furthermore, the links of motivation – financial performance and commitment–non-financial performance are stronger in the financial industry than the IT industry. The findings might imp ly that service innovation of financial industry is strongly driven by frontline employees’ motivation and commitment. 6.2. Managerial implications
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This study calls on practitioners to consider the role of frontline employees in realizing the value of co -creation and how to effectively co-create with frontline employees to achieve service innovation. The findings suggest that the co creation with frontline employees is not only to obtain feedback from them, but also to influence them during the co creation process. The firms that plan to develop service innovation could adopt the co -creation approach through a consecutive form (i.e. from pre-commercialization to post-commercialization) in order to interact with frontline employee. More specifically, practitioners could use the scale of this study to review their co -creation relationships with the frontline employees. They could check the status of this relationship, including the frontline employees’ participation, the communication of information delivery for employees, and whether there is continuous interaction with frontline employees. Through such a comprehensive inspection of co -creation relationships with frontline employees, practitioners could identify weaknesses in co-creation relationships and thus, develop business strategies or policies to enhance co-creation activities to benefit service innovation projects. Finally, the findings suggest that service managers should pay more attention to frontline employees’ perceptions during service innovation process. To deeply cooperate with frontline employees and carefully respond to employees’ feedback, it might be helpful to increase their satisfaction and commit ment towards new services, and further enhanced their motivation to deliver new services well. 7. Limitations and future research We acknowledge several limitations of this study and the fact that there is much work yet to be done in the service innovation field. 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