Conceptualising and measuring service innovation in project-oriented service firms

The literature on NSD-based competitive strategy that has grown in significance suggests that service innovation or new service development (NSD) enables service firms to gain competitive advantage. However, the literature still lacks a well-founded conceptualisation and measure of the NSD construct. Addressing this need, this study uses insights gained from literature and in-depth interviews along with data collected from 180 project-oriented firms (i.e., firms that use projects to deliver services) to conceptualise and measure the NSD construct. Two dimensions of NSD that facilitate value creation are identified and incorporated in the new measure. These dimensions reflect the change initiatives embodied in the interactive and supportive dimensions of the new service offering. Results suggest that NSD leads to competitive advantage.