How do collaboration and investments in knowledge management affect process innovation in services?
Mona Ashok, Rajneesh Narula & Andrea Martinez-Noya
#2016-039
Purpose: Despite the keen interest in radical and incremental
innovation, few studies have tested the varying impact of firm-level
factors in service sectors. This paper analyses how collaboration with
existing and prospective users, and investments in knowledge management
(KM) practices can be adapted to maximise the outputs of radical and
incremental process innovation in a Knowledge-Intensive Business Service
(KIBS) industry.
Methodology: Original survey data from 166 Information Technology
Service (ITS) firms and interviews with 13 executives provide the
empirical evidence. PLS-SEM is used to analyse the data.
Findings: Collaboration with different types of users, and investments
in KM practices affect radical versus incremental process innovation
differently. Collaboration with existing users influences incremental
process innovation directly, but not radical innovation; and prospective
user collaboration matters for radical, but not incremental innovation.
Furthermore, for radical innovation, investments in KM practices mediate
the impact of prospective user collaboration on innovation.
Implications: While collaboration with existing users for incremental
process innovations does not appear to generate significant managerial
challenges, to pursue radical innovations firms must engage in intensive
collaboration with prospective users. Higher involvement with
prospective users requires higher investment in KM practices to promote
efficient intra- and inter-firm knowledge flows.
Originality: This study is based on a large-scale survey, together with
management interviews. Radical and incremental innovations require
engagements with different kinds of users in the service industry, and
knowledge management tools.
JEL Classification: O32, M15, F23
Keywords: user collaboration, existing and prospective users, incremental and radical process innovation, KIBS firms, knowledge management, PLS-SEM