An Integrated View of Service Innovation in Service Networks

This chapter provides an insight into how service innovation may be enabled in service systems. In particular, we look at the ability of the organizational networks to collaboratively generate the capacity to adapt to changing circumstances rather than as individual firms on their own, using the RARE (Resources, Activities and Routines configured and reconfigured through Entrepreneurial actions) strategic framework. This leads into unraveling the complexity of strategic decision making in service networks through co-evolutionary adaptation, or the learning of organizations over time and the resulting virtuous process of experience, learning, and dynamic capabilities enabling them to respond to and launch a variety of competitive actions. Finally, we report on how service networks can address the duality of dynamic control capacity and responsiveness, known as the Paradox of Flexibility, through linking strategic and operational capabilities, as well as customer-supplier duality capabilities, in real time. This in the end results in innovation in services or our notion of “elevated” service offerings.