Service Innovation: A Review of the Literature

Services are fast overtaking manufacturing to form a dominant proportion of the world economy. Service innovation is increasingly seen as a vector of sustainable growth and competitive advantage at the firm-, industry- and economy-level. Innovation started evolving as a key discipline of research over the twentieth century. Initially, innovation research was predominantly focused on science and technology and the new product development approach for commercializing ideas and inventions mainly in the manufacturing industry. With the increasing growth of services in today’s organizations and economy, the importance of understanding service innovation concepts and practices has been on the rise. Over the last two decades, researchers have hence been directing attention to innovation in the context of services. Today, service innovation has evolved into a vast field encompassing the study of intangible processes and dynamic interactions among technological and human systems that lead to managerial and organizational change in services. The literature on service innovation is expanding into a diverse and cross-disciplinary body of knowledge scattered across economics, marketing, organizational science, and management perspectives. The purpose of this chapter is to cut through this complexity and diversity in the streams of extant service innovation literature, and provide a holistic overview of the literature in this rapidly growing field. Organized across three broad themes: Overview of Service Innovation, The Dynamic and Systemic Process of Service Innovation, and Management of Service Innovation; this chapter presents a consolidated guide to the service innovation concepts and practices.