Linking service innovation to firm performance : The roles of ambidextrous innovation and market orientation capability

Purpose How in essence a firm’s service innovation affects its performance is always an intriguing and important issue to business researchers and practitioners. However little is known about the moderating effects of a firm’s approach to innovation and capability of marketing orientation that influence this aforementioned relationship and the underlying mechanisms. This paper aims to examine how ambidextrous innovation (exploration and exploitation innovation) and market orientation capabilities (market-sensing and customer-linking capabilities) can shape the relationship between service innovation and firm performance. Research model was developed based on theoretical foundation of the resource-based view and the rationed perspective. Design/methodology/approach Using an original data set comprising 170 service-oriented firms from Taiwan, the authors found that ambidextrous innovation and market orientation capabilities can significantly enhance performance for service-oriented firms. The authors used the traditional ordinary least squares regression and the zero-inflated Poisson regression to test the five hypotheses. Findings The empirical results fully support the hypotheses that ambidextrous innovation and market orientation capabilities can significantly enhance firm performance. These results imply that the benefits of ambidextrous innovation and market orientation capabilities can coexist in a service innovation deployment and that these combined benefit firm performance. Originality/value The ambidextrous innovation and market orientation capabilities play catalytic roles during innovative service implementation in the service-oriented sectors. The roles of these factors have rarely been examined together before. Hence, this study addresses the gaps in current understanding and provides valuable insights, particularly in the context of the future service innovation deployment. In addition, the theoretical and managerial implications of the findings provide useful and valuable information for both the researchers and managers of the service-oriented.