The relationship between strategic orientation, service innovation, and performance

Purpose – The purpose of this paper is to determine how a firm's strategic orientation affects service innovation capability and the resulting impact on market performance. Design/methodology/approach – A survey was administered to supply chain executives. Structural equation modeling was used to analyze the relationships among the following constructs: customer orientation, competitor orientation, cost orientation, service innovation, and market performance. Findings – Although the relationship between cost orientation and service innovation is not supported, the relationships between customer orientation and competitor orientation and service innovation are supported. Additionally, the relationship between service innovation and market performance is supported. Research limitations/implications – This study is one of a limited number of studies which has empirically addressed service innovation. Additional research is needed to address the impact of a firm's strategic orientation on product innovation capability. Practical implications – The study found that firms seeking to develop a service innovation capability should employ customer orientation, competitor orientation, or a combination of the two different types of strategic orientation. Originality/value – Service innovation has received very little empirical attention in the current innovation literature. This paper fills in some of the gaps in the literature.