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Enabling Service Innovation : Dynamic Capabilities

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Currently, most of the professional service firms or PSFs are facing issues because of regulatory changes in frequent rate, client demands, globalization and the impact of information technology. Due to the aforementioned challenges, most of the professional service firms could not successfully pursue their individual business model as well as operational methods. Driven by the urge to respond against the aforementioned frequent issues, majority of the progressive professional service organizations are adopting and applying the concept of service innovation in terms of a convenient solution (Barrett et al. 2015). In this context, it is required to mention that the fundamental purpose of a professional service firm is to provide sufficient amount of value to the clients. It has been found out that dynamic client demands and growing impact of globalization and information technology harms the aspect of value proposition in majority of the PSFs. With the help of service innovation, it is possible to bring change in business model and operations, which can later lead the organization in proposing appropriate value to the target market (Empson et al. 2015).

Service innovation in the professional service organizations change the development process and involve the utilization of new practices by the hands of the corporate professionals. It has been recognized that service innovation can play the key role for increasing corporate growth as well as competitive advantage and one of the most frequently used ways of pursuing service innovation is found to be the model of “Innovation Dimension” (Kastalli and Van Looy 2013). The “Innovation dimension” model of service innovation considers four particular dimensions through which a PSF can start innovating and can finally maximize its performance or productivity. Four different dimensions through which a PSF can successfully implant service innovation and increase its productivity, are – process, offering, market position and paradigm (Kindström et al. 2013). With the help of “process” innovation dimension, organizations, which lack proper management as well process definition, can successfully govern the ways of working. More precisely, process innovation as an effective method of service innovation works efficiently in engaging employees in their individual position. Furthermore, with the application of process innovation, management of professional service organizations can fruitfully encourage their employees to innovate ideas for making incremental improvements (Mina et al. 2014). With incremental improvements, it is expected that employees of an organization can positively increase their productive power, which finally determines the maximization of performance of an organization.


On other hand, with the help of “offering” innovation, professional service organizations can successfully improve its existing service or can create new service model and strategies. For example, by applying the “offering innovation”, a law firm named – Mills & Reeve developed an iPhone application for the organization’s offering in “”. Another innovation dimension, “Market position” helps a PSF in maximizing its productivity by repositioning its value proposition in the contemporary market place. Moreover, the application of the innovation dimension – Market position, helps an organization in enabling investment, which is considered as one of the essential aspects required for maximizing organizational productivity (Salunke et al. 2013). However, with the help of “paradigm” innovation dimension, professional service firms those are suffering from weak business model, can successfully reinvent individual service model. Professional service organizations that prefer to have a dynamic outlook and an impressive extent of profit, consider reinventing and keep changing their individual business models. For example, a multinational service giant like IBM, prefer to keep reinventing its business model to have a compatible relationship with the contemporary market trend. IBM gradually changed its business model from keeping one-based hardware system to one-based software service. Therefore, it can be said that service innovation is one of the potential core competencies of a PSF that can enhance performance standard and amount as well as can bring good reputation for a PSF.

However, it is to consider in this context that with the help of “market position” innovation dimension, an organization may successfully maximize its productivity though the particular innovation dimension can bring varied risks too. If an organization would frequently change or reinvent its business model, then it is possible that the organization would face resistance from the existing management and employees (Kastalli and Van Looy 2013). Moreover, it is also to consider that service innovation in a PSF can be accomplished by integrating active support from the existing leaders, a potential set of business strategies, a convenient business culture, sufficient amount of resources and a structured process. Lack of any of the aforementioned aspects may not help a PSF to maximize its productivity with the application of service innovation.



Barrett, M., Davidson, E., Prabhu, J. and Vargo, S.L., 2015. Service innovation in the digital age: key contributions and future directions. MIS quarterly, 39(1), pp.135-154.

Empson, L., Muzio, D. and Broschak, J. eds., 2015. The Oxford handbook of professional service firms. Oxford University Press, USA.

Kastalli, I.V. and Van Looy, B., 2013. Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31(4), pp.169-180.

Kindström, D., Kowalkowski, C. and Sandberg, E., 2013. Enabling service innovation: A dynamic capabilities approach. Journal of business research, 66(8), pp.1063-1073.

Mina, A., Bascavusoglu-Moreau, E. and Hughes, A., 2014. Open service innovation and the firm's search for external knowledge. Research Policy, 43(5), pp.853-866.

Salunke, S., Weerawardena, J. and McColl-Kennedy, J.R., 2013. Competing through service innovation: The role of bricolage and entrepreneurship in project-oriented firms. Journal of Business Research, 66(8), pp.1085-1097.


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