Investigator: Atreyi Kankanhalli.
Service innovation is critical to firms’ competitive advantage and, thus, firms desire to make their services increasingly innovative. However, the relationship between the innovativeness and performance of a new service is unclear. Conflicting findings and the related literature suggest that service innovativeness is multidimensional and its impact on performance could be nonlinear. However, limited research has studied these aspects, both theoretically and empirically. Furthermore, prior research has mainly considered customers as inputs to value creation, which may not capture their precise role. Drawing on service-dominant logic, we propose two dimensions of service innovativeness, namely novelty and intensity, which differentially influence the performance of a new service. We further posit that customers are part of the value cocreation process, thereby directly and indirectly affecting new service performance. The model was tested using a panel dataset of 234 mobile apps over 14 months. Results indicate important asymmetries in the impacts of novelty and intensity on mobile app performance: novelty shows a curvilinear relationship with mobile app performance whereas intensity shows a positive linear relationship. Furthermore, customer participation positively impacts mobile app performance and positively moderates the effects of intensity and novelty on mobile app performance.