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Only the Brave: Product Innovation, Service Business Model Innovation, and Their Impact on Performance
Author(s) -
Visnjic Ivanka,
Wiengarten Frank,
Neely Andy
Publication year - 2016
Publication title -
journal of product innovation management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.646
H-Index - 144
eISSN - 1540-5885
pISSN - 0737-6782
DOI - 10.1111/jpim.12254
Subject(s) - complementarity (molecular biology) , product innovation , service innovation , business , product service system , innovation management , business model , industrial organization , service (business) , profit (economics) , marketing , profit model , product (mathematics) , microeconomics , economics , genetics , geometry , mathematics , biology
Recent empirical findings concerning the performance effects of service business model innovation (servitization) and its interplay with product innovation are mixed. Using the lenses of the demand‐based view on value creation and complementarity, the performance impact of two key service business models is examined: the product‐oriented model and the customer‐oriented model, implemented jointly with product innovation. Results indicate that the interplay between service business model innovation and product innovation results in long‐term performance benefits coupled with a degree of short‐term performance sacrifice. Service business model innovation in isolation from product innovation results in short‐term profit gains but long‐term knowledge loss and, thus, market performance decline. Our study suggests that firms need to look beyond the evidence on short‐term effects in order to achieve superior performance in the long run.