Albeit innovation networks have been studied quite extensively in a manufacturing context, little is known of them in a service setting. Furthermore, few previous articles have discussed the external stakeholders and their role in such networks. Thus, this paper discusses service innovation networks, argues why they are important for a service firm and conceptualises the different external actors and their role in the network. Suppliers, distributors, customers, external entities, authority and general public are identified as principal actors having different roles in the new service development process. Furthermore, we present a model that integrates external stakeholders, interactions and resources into the service innovation networks.
Introduction
During the last decade service innovation has been acknowledged as a great source of competitive advantage and organic growth for the service firm (Busse & Wallenburg 2011; Dilk et al 2002; Kandampully 2002; Melton & Hartline 2010). Furthermore, the innovation process has been characterized by various scholars (Green, Howells & Miles 2001; Edvardsson, Kristensson, Magnusson & Sundström 2012; Johne & Storey 1998) as highly interactive and prone to collaboration, which on the other hand has led to a rising dialogue around networks of relationships between different actors in a service firm's environment (Agarwal & Selen 2009; de Vries 2006; Mele et al. 2010). This offers a new perspective to the innovation process, where the service firm no longer is considered to be isolated but rather part of a network of various stakeholders.
In this paper we consequently argue that networks, commonly defined as the many different linkages between actors in a system (Rogers & Kincaid, 1981), should be regarded as of great importance in the innovation of new service offerings. Service innovation is thus a process where besides the service company also other stakeholders like suppliers, distributors and customers have a significant role (de Reuver & Bouwman 2012; Tether & Tajar 2008). Research on service innovation seen from the network perspective, and particularly on the role of external actors in these networks, is still rather scarce (Smith & Fischbacher 2005; Syson & Perks 2004; Storey & Easingwood 1998). Due to the lack of literature on the subject, this paper aims at (1) discussing service innovation networks and (2) conceptualising and examining the different external actors as well as their role in the innovation process. In correspondence with this we propose the following research questions:
R1 what is a service innovation network?
R2 why should one look at the service innovation process from the network perspective?
R3 which actors can be found in the external environment of a firm's service innovation network?
R4 what is the role of these external actors in the innovation process?
Furthermore, involving customers to the innovation process has been one of the most popular topics within the stream of service innovation research (Alam & Perry 2002; de Brentani 1991), while other actors such as suppliers, distributors and competitors have received less attention (Greenley & Foxall 1998). Thus, we have decided to limit our paper to these actors and omit customers from the analysis. This will also serve as our contribution to the integrated part of service innovation and network literature; and hopefully encourage other scholars to examine it further in both empirical and conceptual ways.
When it comes to the outline of this paper we will first discuss service innovation and the network approach. Subsequently, we will put focus on service innovation networks, their origin and benefits of applying this approach. After this we examine the external stakeholders in a service innovation network by discussing who they are and what they do. Here we also present our model of external stakeholders in a service innovation context. After the discussion we propose a new research agenda for the field and elaborate on possible limitations pertaining to the study.
Service innovation and the network approach
Both practitioners and scholars have recognized innovation of new service offerings as important for a service firm's success, but it still remains a rather under-researched area in comparison to product innovation both in regards to conceptualization and empirical studies (Carlborg, Kidström & Kowalkowski forthcoming; Edvardsson & Olsson 1996; Gallouj & Windrum 2009; Smith & Fischbacher 2005). Since the service sector now leads the gross domestic products in today's developed economies, service innovation should consequently be regarded as a driver of wider economical growth (Carlborg et al. forthcoming). Being a service innovator on today's market many times also equals competitive advantage. According to Kandampully (2002) many of the leading service providers have not only managed to create new services, but also form entirely new markets. Thus, having the ability to innovate service offerings can prove to be vital for the survival of the service firm and is accordingly an important future research field in the academic realms.
Innovation as a concept derives from Schumpeter, the first one to propose the term in an economic context in 1934 (Nelson & Winter 1982). Since then many academics and scholars have discussed innovation in their research. According to Pittaway and colleagues (2004) innovation comprises the generation and utilization of new services and products, processes and business practices. Håkansson (1987) and Lundgren (1995) on the other hand state that innovations should be seen as a result of interplay between many actors. The authors say that the innovation process consists of two or more parties that together create something new, which ultimately results in a new product or service.
The term service innovation per se emerged from the realms of product innovation and New Product Development (NPD) during the last decades (Kline & Rosenberg 1986; Syson & Perks 2004). This is due to the development of a more knowledge-based service economy, where innovations have become gradually more technological in nature (Van de Ven 2005) and products and services more integrated to each other. At the same time the differences between services and products have also been acknowledged. When seen from the S-D logical point of view, Vargo & Lusch (2008) have described service innovation as an innovative method of creating value for the customer by using both vigorous and impalpable resources.
Depending on the perspective on service innovation taken on by different scholars and academics, the concept can further be categorized into three different approaches (Carlborg et al. forthcoming; Coombs & Miles 2000) including the (1) assimilation, (2) demarcation and (3) synthesis approach. The first one regards innovation as generic and has in general been studied from the manufacturing perspective in numerous empirical studies (Gallouj 1998). The demarcation approach on the other hand makes a distinct separation between product and service innovations pertaining to the differences between them. The third approach again looks at service innovation as an integrated and multidimensional process, where both the service (non-technological) and product (technological) perspectives are considered (Drejer 2004). The synthesis view has emerged during the last years (Carlborg et al. forthcoming) and can thus be regarded as still being in its infancy phase. Nevertheless, many authors succumb to this approach (Coombs & Miles 2000; Gallouj & Weinstein 1997) since it accentuates a unified and multifaceted approach to service innovation. Moreover, according to Fischer & Varga (2002) this type of view requires the service firm to take part in more collaboration ventures and to form networks of relationships with other actors in their environment. Thus, the synthesis view goes hand in hand with the network approach applied in this paper and discussed in the following paragraph.
As said by Lievens et al. (1999) innovation processes ultimately consist of (a) communication and (b) information and knowledge processing. Thus, coordination within the organisation and among external actors is heavily emphasized. This is in accordance with Green et al. (2001), Edvardsson et al. (2012) and Johne & Storey (1998) who all state that interactions play an important role in service innovation. According to Syson & Perks (2004) and Storey & Easingwood (1998) the very nature of services can furthermore be captured in the concept of interaction. Due to the interactivity of services per se the authors argue that a network approach can be very beneficial to a service firm when it comes to harnessing and managing the service innovation process. This notion is also supported by Schilling (2011) and by Kandampully (2002), as he claims that the service function in a firm interacts with more or less every component and movement of the firm. Kandampully (2002) furthermore states that external relationship networks are essential in order to succeed on a market where the customer's needs are becoming increasingly challenging. These notions put forward by the authors (Kandampully 2002; Schilling 2011; Syson & Perks 2004) all argue for a network approach to the service innovation process. In the next section we will therefore discuss service innovation networks in particular, what they are and why the firm can benefit from applying this approach.
Service innovation Networks
Over the past years networking has become increasingly popular in organisations and both practitioners and scholars have discussed it in various contexts (Borgatti & Foster 2003; Dilk et al. 2008; Kandampully 2002; Rycroft & Kash 2004). In the past it was more considered to belong to the fields of product innovation and manufacturing (Brass et al. 2004; Borgatti & Foster 2003) where it was examined in academia since the early 80s (Powell, Koput & Smith-Doerr 1996). In recent years, however, the interest in studying innovation networks in a service context has increased and according to Schilling (2011) there is now a consensus within the literature that new service development occurs in a network involving numerous different actors.
Miles & Snow (1992) explain networks as clusters of firms or specialist units co-ordinated by market mechanisms instead of chains of commands, when seen from a business perspective. The term itself, in a more abstract manner, can simply be grasped as nodes and relationships connected to each other (Fombrun 1982; Rogers & Kincaid 1981). When applied to the service context, service innovation networks per se can thus be outlined as many different actors and their relationship to each other within a service firm's environment. Both inter-personal and inter-organisational relationships therefore play a significant role, either directly or indirectly. Consequently we argue, in congruence with Syson & Perks (2004) that one additionally has to look at the service firm's environment from a relationship perspective in order to truly understand why and how networking is benefiting the service organisation. Relationships consist of interactions between different parties. By taking on a relationship approach different actors, such as competitors, customers and suppliers all have a role in the innovation process. The relational view is supported by the views of Hitt et al. (2007), Kandampully (2002) and Smith & Fischbacher (2005) as well. In such a network consisting of relationships and activity links (Syson & Perks 2004) the innovation occurs through different constellations such as strategic alliances and partnerships including distributors, suppliers, buyers and customers (Ford 1998). These networks can be short or long lasting, operating along a continuum of regional to global level.
But why is then networking beneficial in development of new services? Why should we identify the environment of a service firm as a network consisting of relational actors? There are several reasons for the service firm to do so. According to a number of authors (Ostrom et al. 2010; Vorhies & Morgan 2005; Schilling 2011; Syson & Perks 2004) actors in a network cooperate in order for all the parties to receive a (1) competitive advantage. Previous research has also shown that it (2) encourages creativity, (3) increases productive information flows and (4) makes idea exchanges possible (Lorenzoni & Baden-Fuller 1995). Furthermore, by including several viewpoints and knowledge areas in the innovation process (5) multifaceted problems are more easily solved (Lipnack & Stamps 1993). Syson & Perks (2004) also found that a network approach (6) helps understanding the course of resource exchange in the service firm. Lorenzoni & Baden-Fuller (1995) further argue that the benefits of alliances and interfim networks include: (7) lower costs, (8) more flexibility and (9) greater productivity. Moreover, since firms nowadays are more concentrated on their core capabilities, a demand for cooperation in an innovation context arises more easily than before (Linnarsson & Werr 2004). Thus we, in addition to previous authors propose that seeing the innovation process in a service firm through the network perspective can help the firm in gaining a better position on the market. The firm has to bear in mind though, that with a wider network of actors in the innovation process both denseness and challenges for the service firm are increased (Noori & Lee 2004). Thus, it is important to choose wisely which actors to cooperate with.
The innovation network consists of actors (Kandampully 2002) cooperating on either an internal or external level. These actors can also be named stakeholders, and both terms are used interchangeably in this paper. The external actors can be defined as those situated outside the company including suppliers, competitors and customers. Internal actors on the other hand are located within the firm and consist of managers, employees and leaders (Kandampully 2002). According to a study conducted by Jenssen & Nybakk (2009) especially external relations are important in innovating new service offerings, particularly in smaller firms that are knowledge intensive. There is, however, a clear lack in the literature on a collective discussion on all the external actors. Thus, we have decided to solely put focus on the external actors and in the next section we make an in-depth analysis of them. Yet, as previously stated in the introduction, we will not incorporate the consumers due to the extensive research that has already been done on consumers as co-creators in a service innovation setting (Alam & Perry 2002; de Brentani 1991). Therefore, we do acknowledge that they have an important role when innovation is seen from a network perspective, but we will not examine them further in order to give room for other actors that haven't been discussed much previously.
The role of external actors in service innovation networks
The literature about the role of other actors, besides the service company and its customers, in the innovation process is as previously stated, quite limited. Perks & Syson (2004) have studied a large UK building society from the network perspective where they identified the key internal and external actors in the company's innovation processes. The study applied ARA-framework to service innovation networks and concluded that interactions play an important role. Furthermore Perks, Gruber & Edvardsson (2012) have conducted a case study where they reviewed interactions between network partners in the context of radical service innovation. Moreover, Smith & Fischbacher (2005) applied the stakeholder theory to new service development, concentrating on stakeholder centrality, relationships and salience. It was found that a multitude of stakeholders, both internal and external, have a role in the process of new service development.
De Vries (2006) has argued that most of the service firms nowadays are linked to other actors through networks. Thereby the model proposed by Gallouj & Weinstein (1997) should be corrected so that competencies and technology would derive not only from one provider but several. This suggestion was also confirmed by some case studies showing how different actors interact with each other incorporating their competencies and technology to the service innovation process. On the other hand, Mele et al. (2010) have decided to look at service innovation from the SD-logic perspective where different network actors co-create value innovation through resource integration. According to Mele et al. (2010) it is not significant whether we look at product or service innovation, since ultimately it is value that is being innovated. The authors also propose taking the network, instead of a single company, as a unit of analysis and from this approach conducted a case study of an Italian packaging firm. Moreover, the same authors also present three more case studies where they analyze innovation processes in different Italian firms from the network perspective (Mele et al. 2011).
Whilst all the papers discussed above, in their analysis, concentrate on one lead firm or organization and their network partners, Gottfridsson (2012) proposes a different perspective on how to study the new service development process consisting of several actors. In his case study different organizations are working together in a new service development project for a public transportation ticket system. The author proposes to analyze this process from a communication perspective and to look at the different roles of the actors.
We conducted a literature search combining keywords service innovation, new service development, networks, collaboration, external actors, stakeholders in EBSCO Business Source Complete, ProQuest ABInform, Elsevier Science Direct and Emerald databases. The search results were scanned for any discussion about the external stakeholders and their role in new service development or service innovation. The search resulted in seven articles that are summarized in table 1.
Who are the external stakeholders?
Syson & Perks (2004) present the external actors in new service development in a simple way: suppliers, distributors and competitors. This view is also supported by de Vries (2006) who mainly sees distributors and suppliers as important network actors. However, Mele el al. (2011) distinguishes between vertical relationships including suppliers and customers, horizontal relationships representing competitors and transversal relationships comprising of cooperation with universities, research institutes and other innovative firms. Moreover, also different social and ethical stakeholders can play an important role in the innovation process (Mele et al. 2010). Interestingly, although some authors (Syson & Perks 2004; Mele et al. 2010) have mentioned competitors as important actors in a firm's innovation network, there is no empirical evidence that would give us more information about this phenomenon. Likewise, when seen from the network perspective the customer's role is of varied importance in the innovation process according to various authors. For example Mele et al. (2010) argue that customers have a prominent role as stakeholders in the innovation process, whereas Smith and Fischbacher (2005) found that customers could rather be seen as dormant stakeholders whose interest is represented by other parties in the network. Figure 1 summarizes the different stakeholders according to the literature that we have now discussed.
Table Overview of literature discussing external stakeholders
External stakeholders
Key findings
Methodology
Theoretical framework
Authors
Suppliers, distributors, competitors
Interactions are the key element of networks; networks are more suitable for radical innovation
Case study: a building society
ARA-framework
Syson and Perks 2004
Legal services, intermediaries, customers, design companies, town planners, health authority, general public, external agency (academic)
Services are an amalgam of stakeholder interests. Customers are dormant stakeholders whose interest are represented by other stakeholders
Case study, 4 companies: 2 financial and 2 medical services
Stakeholder theory
Smith and Fischbacher 2005
Suppliers, distributors
Different network partners were connected to each other and integrated both their competences and technology to service innovation
Case study: 5 companies- insurance, social security, information technology, professional training, telecom industries
Gallouj & Weinstein (1997) model
De Vries 2006
Customers (in B2B context), suppliers, research centre, consultants, social and ethical stakeholders, distributors
Customers and other stakeholders become real co-innovators who exchange and integrate resources to co-create value
Case study: a packaging company
SD-logic, network analysis
Mele, Spena, and Colurcio 2010
Vertical (suppliers and customers), horizontal (competitors) and transverse relationships (research centres, universities, other innovative firms) (from a cosmetics company)
Service innovation is an open process where different stakeholders integrate their resources and become co-innovators and co-producers of value
Case study: 3 companies from motor, food and cosmetics industries
SD-logic
Mele, Spena, and Colurcio 2011
Installation company, supplier companies, distributors, intermediaries( media and police force)
Co-creation is a multi-faceted process; innovation can be independent initiated by network actors or initiated and driven by lead user innovation activity
Case study: a car insurance company
SD-logic, networks
Perks, Gruber and Edvardsson 2012
Public Transport Authorities, suppliers, transportation subcontractors
Three groups of actors were identified based on the activities of the actor in the new service development process
Case study: public transportation ticket system
Knowledge transfer and organizational learning in networks
Gottfridsson 2012
External stakeholders.bmp
Figure External stakeholders in service innovation
When analyzing service innovation from the network perspective, it can be difficult to clarify the role of the customer, as there are many different actors in a network. It is of course easy, when the customer is as the same time the consumer but many times services are delivered to other companies as well. Thereby, a company who has a central position in its own network might be a supplier or a provider of external know-how for another company that serves the end-users. The case study of Italian packaging firm, where the studied company was innovating together with its customers who served the consumer markets illustrates this well (Mele et al. 2011). For this reason, both the customers and the end users were added to the figure that summarizes the external stakeholders, although this paper does not concentrate on analyzing customer involvement per se.
The main external stakeholders that we are going to discuss more in detail and how they contribute to the new service development process are summarized in table 2.
Table External actors and their contribution to service innovation
Actor
Contribution to the innovation process
Suppliers
Idea generation, conceptualizing new ideas, concept design, providers of knowledge and experience, collaboration with their own suppliers
Distributors
Knowledge about and contact with the end user, idea providers, help with marketing strategies, achieving good selling points, help at the launch stage
External resources
Know-how, knowledge, skills, resources, new competencies
Authority
Information, knowledge
General public and media
Information, help at the launch stage
Suppliers
Suppliers were the most often-mentioned external stakeholder category. Due to the variety of companies from different branches, the suppliers could either be providers of something tangible like raw material or technological equipment (Mele et al. 2010) or of some services (de Vries 2006). Moreover, suppliers could also be a provider of knowledge needed for the service, for example data (de Vries 2006; Smith & Fischbacher 2005). Many case study companies showed a similar pattern of increasing cooperation with their suppliers. This was found to be important in order to establish a mutual understanding of customers' needs and subsequently look for new solutions together (Syson & Perks 2004; Mele et al. 2010).
Very often suppliers were seen as important actors at the idea generation stage and also as the ones who could help with conceptualizing new ideas (Mele et al. 2010). Furthermore, suppliers were also considered as an important part of the innovation process because of their specific knowledge and experience. Thus they were often used as help during the concept design process (de Vries 2006). Many times the suppliers were the ones who possessed important know-how for transforming new ideas into real services (Mele et al. 2011; Syson & Perks 2004). Last but not least the suppliers could also collaborate with their own suppliers and partners in the service innovation process (Perks et al. 2012).
Distributors
Distributors of a new service can be seen very differently- in some cases they can be agents or the ones who sell the service to the end-user (Syson & Perks, 2004). In other cases distributors can be seen as the ones who actually perform the final service to the customer (Smith & Fischenbacher 2005; de Vries 2006). Moreover, in case of involving more tangible elements like products, the distributors also often take care of logistics (Mele et al. 2010).
Most of the studied companies collaborated with their distributors with the aim of getting to know customers better. This was done since distributors were often the ones having more direct contact with the end-user (Syson & Perks 2004; Mele et al. 2010). Moreover, distributors were seen as good idea providers and help when working out marketing strategies (Mele et al. 2011). Mostly distributors were more interested in involvement at the launch stage, since this was the part they could benefit the most from. For the company itself, the direct benefit from involving distributors to the service development process was to get better selling points and achieve better knowledge of the new service concept among the agents (Syson & Perks, 2004).
External resources
Besides suppliers and distributors most of the companies engaged a multitude of external entities to their innovation process. Collaboration with different institutes for lab-tests, R&D and academic knowledge was often mentioned (Mele et al. 2010; Mele et al. 2011). Some companies also used the services of external marketing agencies and design companies. Moreover, coaching and HR-skills training were added as external resources to the service development process (de Vries 2006). In some occasions the innovating companies had also looked for new external partners in order to acquire new competencies and add them to the final service offering (de Vries 2006; Perks et al. 2012). For example, in one case study the insurance company commenced a partnership with another company responsible for absenteeism control in several customer-companies (de Vries 2006).
Authority
Depending on the nature of the service, some new service development processes also require legal consultation. For example, the case of building a new hospital required extensive consultation with health authority (Smith & Fischbacher 2005) and planning a distribution network for a bank resulted in consultancy sessions with town planners (Smith & Fischbacher 2005). These stakeholders usually provide necessary information about the requirements of the new service but also represent their own interests that often have to be considered. On some occasions, collaboration with authority can also go beyond mere information collecting, for example the police force had to develop a new protocol for responding to calls from the insurance company's new service users (Perks et al. 2012).
General public and media
In the process of developing new services that affect a wider public, also media and public opinion have to be taken into account. While developing the concept for a new hospital, some public opinion polls and surveys were conducted, but finally it was concluded that the voice of public opinion was taken into consideration much less than other stakeholders (Smith & Fischbacher 2005). On the other hand, when developing new packaging with Braille labels, some consultancy with social and ethical stakeholders was needed, as well as extended communication with media (Mele et al. 2010).
The roles of external actors in a service innovation network
Gottfridsson (2012) studied a complex network where a multitude of actors initiated and collaborated in a new service development process. The author identified four different roles that actors can take in the service innovation process: information carriers, information collectors, information translators and supporting actors/facilitators. The first group represented the actors who had some valuable knowledge about the service project, while the second group was the ones who collected and put together the information in a usable way. Thereafter the information translators would collect and interpret the information so that it would be possible to translate it into a new service. Lastly the facilitators would help to ease the knowledge transfer and communication processes. (Gottfridsson 2012)
However, the framework proposed by Gottfridsson (2012) carries a very different perspective from the one where one innovating firm is in the centre of its own network and collaborates with other actors in order to develop a new service. When combining these different perspectives, it comes evident that very often one firm has the responsibility for the whole process and has to take more than one of the roles proposed by Gottfridsson (2012). Moreover, taking the importance of interactions (Syson & Perks 2004; Mele et al. 2010; Perks et al. 2012) into account, it is also possible to view the outcomes as transforming an idea into service or supporting the communication process as co-creation between one or more network actors.
Additionally, information represents only one part of resources that are integrated into service innovation. De Vries (2006) argues that different network actors combine their competencies and technology into new service development. Syson & Perks (2004) on the other hand talk about intangible resources that different actors contribute to a service innovation process; these resources are mainly skills, information, knowledge and experience. Mele et al. (2010) found that different resources are integrated into service innovation from different partners. These resources are mainly competencies and expertise like operational, technical, graphical competencies or knowledge for example about the customers or the market. Notably, no tangible resources like technology are explicitly were mentioned by Mele et al. (2010). Regardless of this, in our analysis we consider resources as both intangible like competencies, knowledge, information, experience, expertise and skills, as well as tangible like technology and other equipment that might be needed.
The existing knowledge about different stakeholders in innovation networks and the roles they can take is summarized in figure 2 (See figure 2). The roles in networked service innovation are organized according to the roles proposed by Gottfridsson (2012). However, we suggest that very often one lead-firm can take on more than one or even all of these roles simultaneously. Moreover, although Gottfridsson (2012) did not find the role of facilitator particularly important, we propose that when having an interaction-based view, this role becomes crucial and has to be undertaken by the lead firm. Perks et al. (2012) have argued that the lead firm is responsible for enabling and facilitating interactions between different network actors. Moreover, Mele et al. (2010) found that although innovation happens in an open environment between several actors, one firm might take the lead and be the main resource integrator. Thereby we see that the lead-firm has the role of a facilitator.
The main information carriers in the network are usually the customers, end-users and distributors, when it comes to the idea development and knowing the market needs. At the same time general public, media and authority also possess valuable information, so they are considered to be information carriers as well. Moreover, many external companies hold know-how and other sorts of information that can be useful in different stages of the service development process. In addition, the lead-firm is added to the list of information carriers as they, due to their central position, also have valuable information about the service. Besides, the lead-firm at the same time acts as the main information collector, putting together ideas from different sources. Distributors and customers, especially in a B2B context, are also regarded as information collectors as they are the ones who most often come up with new service ideas among the stakeholders. Lastly, the lead-firm is also regarded as the main information transformer as it is mostly their responsibility to translate ideas into new services. However, also suppliers and different external resources play an important role in conceptualizing new service ideas; therefore they also have the role of information transformers.
Roles in service innovation.bmp
Figure The roles of external actors, resources and interactions in service innovation
Since interactions are seen as the key element in new service development (Syson and Perks 2004; Mele et al. 2010; Perks et al. 2012), we argue that interactions between different actors, who can also have different roles in the network, contribute to the field of service innovation. In that way different stakeholders become co-innovators (Mele et al. 2011), and are contributing through interactions with other parts in the network. Moreover, we also propose that resources integrated by different network actors to service innovation (Syson & Perks 2004; de Vries 2005; Mele et al. 2010; Mele et al. 2011) have an important role in the process and therefore they were also added to our summarizing model.
Discussion
The aim of this paper was to discuss service innovation networks and conceptualise the role of external actors in the new service development process. This was done by first taking a thorough look at the network approach and thereafter identified the external actors as suppliers, distributors, external resources, authority and general public and media. Subsequently their roles as information carriers, transformers and collectors, where the lead-firm acts as a facilitator, were presented.
While the existing literature on conceptualizing the roles of external actors remains limited, we argued in the beginning that the network approach to service innovation supports the synthesis approach (Gallouj & Savona 2009; Carlborg et al. forthcoming). An innovation network often integrates different actors, services, products and other resources (de Vries 2005; Mele et al. 2010; Gottfridsson 2012) in a way that it becomes irrelevant to differentiate between products and services. Moreover, recent papers (Mele et al. 2010; Mele et al. 2011; Perks et al. 2012) have applied SD-logic to service innovation networks research and thus eliminated the need to make a distinct separation between these two entities.
Furthermore, we have argued that interactions are a fundamental factor and reason why the network approach is applicable to the service innovation context. Accordingly, several authors (Green et al. 2001; Edvardsson et a. 2012; Toivonen & Tuominen 2009) have stated that innovations are the result of continuous and complex interactions between many actors. This view is also supported by other various studies (Syson & Perks 2004; Mele et al. 2010; Perks et al. 2012). Moreover, Gottfridsson (2012) emphasizes the importance of communication between different network actors while the study of Smith & Fischbacher (2005) found that extensive consulting between different parts was crucial in the innovation process.
We have also discussed that the benefits of applying the network approach are many when collaborating with external stakeholders during the service innovation process. The firm can foremost gain a competitive advantage on the market (Schilling 2011; Syson & Perks 2004). Other positive benefits, amongst others, include increased creativity and idea exchanges, lower costs and greater productivity (Lorenzoni & Baden-Fuller 1995). It is however important to choose the external stakeholders with care, since the challenges might also increase when the network is widened (Noori & Lee 2004).
Conclusively, based on the literature reviewed in this paper, service innovation networks can have a positive impact on the firm. When collaborating with external actors they become information carriers, transformers and collectors, which on the other hand results in an innovation co-creation process.
Limitations and implications for future research
There are several limitations to this paper. First of all no empirical study was conducted in order to validate our arguments. Due to this paper being a conceptual one, this was not needed in order to fulfil the scope and objective of it. It would however have made it more applicable for practitioners and this also leads to a potential future vein of research. We call for more empirical research on the different actors that we have proposed in this paper in order to measure the benefits of innovation in a network context. For example, there are no empirical results found on the role of competitors in the innovation process. Here also multiple industries could be considered in order to make the results more generalizable and also in order to find the differences between service industries. The role of the lead-firm as a facilitator in the innovation process should also be studied more from the network perspective.
Also, our study implicates a greater need of studying innovation networks in a service firm in general. Not too many studies have been done on this particular subject and much more is needed in order to gain a comprehensive and all encompassing view of how these networks work. Thus, further conceptualisation and theory building should take place. Furthermore one could also take a thorough look at organisations that consider themselves as a part of a greater network and see how their innovation processes and results differ from organisations where the network approach is not considered. In addition, future research could also more explicitly address different stages of new service development process where different external actors play the most important role.
