Beyond single solutions: harnessing capability configurations for enhanced digital service innovation

PurposeExisting innovation frameworks suggest that manufacturing firms have traditionally developed a complementary model of technological innovations comprising process and product innovations (e.g. Oslo Manual). This article presents digital service innovation as a novel form of technological innovation that is capable of enhancing the performance of firms in certain manufacturing industries.Design/methodology/approachDrawing on technological innovation and digital servitization fields of research, this study argues that digital service innovation, in manufacturing contexts, complements traditional sources of technological innovation, so increasing the profit margins of firms. This effect is significant in industries characterized by business-to-business contexts, high presence of link channels and long product life spans (e.g. manufacturing and computer-based industries). Predictions are tested on a unique sample of 423 Spanish manufacturing firms using parametric (t-test) and nonparametric (fuzzy-set qualitative comparative analysis, fsQCA) approaches.FindingsThe results of this analysis show that a necessary condition so that manufacturing firms can increase profits is the deployment of simultaneous process and product innovations. It also reveals that optimal configuration requires that digital service innovation be undertaken, particularly in machinery and computer-based manufacturing industries. Hence, all three sources of technological innovation are brought together in order to reach the highest levels of company performance. The evidence suggests that technological innovation and digital servitization are closely interrelated in highly innovative manufacturing contexts.Originality/valueThis study's originality and value reside in the fact that it reveals the existence of firms incorporating digital service innovation – a new, technological innovation dimension that challenges existing innovation frameworks – to complement traditional technological innovation sources, namely process and product innovation. Moreover, the study conceptualizes and empirically tests the value-adding role of digital services in firms' technological innovation portfolio.

PurposeThe purpose of this study is to disclose ontology of DSI as a novel concept in servitization community, explore the research context and themes (i.e. technological and industrial sectors) where DSI emerges, unveil methodological complexities of the research on digital servitization and DSI and provide guidelines for future research avenues regarding DSI.Design/methodology/approachBearing in mind the relative novelty of DSI as a concept in servitization literature, the authors adopted a systematic literature review approach to identify 111 peer-reviewed articles published in English language and available in business and management disciplines via scholar databases (Scopus). The analysis of literature discloses descriptive and thematic insights regarding digital servitization and DSI.FindingsThe study provides valuable insights from the descriptive and thematic analyses where classification of articles per publication year, citations, methodology/type of the paper, geographical location of data collection, as well as industrial sector and technological contexts are discussed. Moreover, the unique value of this study is observed through its specific focus on the characteristics of DSI-related literature.Originality/valueThe study is among the first of its kind to provide extensive descriptive and thematic insights on the available literature dealing with digital servitization and DSI, mapping out prior research across a wide spectrum of publication outlets and illustrating the chronological evolution of research on digital servitization and DSI.

Digital innovation is important for current manufacturing industries to achieve innovation. Based on dynamic capabilities theory, this paper empirically tests the effects of three digital innovation (DI) modes, namely, digital product innovation (DP), digital process innovation (DPS) and digital service innovation (DS), on innovation performance (IP) and their intermediate mechanisms. The findings show that (1) DP, DPS, and DS have significant positive effects on IP; (2) developmental capability and absorptive capability play an intermediary role in the influence of DI on IP; and (3) the adaptive capability has a masking effect on the influence of DI on IP. This study comprehensively measures DI modes based on the specific manifestations in the manufacturing industry and provides empirical evidence for manufacturing DI to improve IP. This article proposes, for the first time, that dynamic capabilities have different mediating effects and further reveals the impact mechanism of DI on IP.

PurposeDigitalization in precision agriculture incorporates state-of-the-art digital technologies. The transformation requires manufacturers to launch digital platforms and services. As a result, innovation ecosystems emerge. In turn, digital technologies introduce novelty into innovation processes. This socio-technical transition is critical to understanding Digital Service Innovation (DSI). Thus, it is necessary for a micro-founded analysis that biographizes the socio-technical assemblages between routines, artifacts and humans that emerge from DSI processes. Against this backdrop, this study aims to examine the co-production processes and the configuration of digital servitization ecosystems based on Routine Dynamics and Sociomateriality views and the DSI perspective.Design/methodology/approachThe study builds on multiple in-depth case studies, including three precision agriculture machinery and services ecosystems. For each ecosystem, the biography of the co-production process of the technological solution that integrates different actors and artifacts as a sociomaterial assemblage is reconstructed. The qualitative data consist of in-depth interviews with managers in the case companies and stakeholders in each ecosystem. Three ecosystems were surveyed. Documentary information from websites and technical documents on the products and services were systematized and incorporated into the analysis as a form of triangulation.FindingsThe analysis of ecosystem biographies evidences that DSI processes involve co-production between routines, actors and artifacts. This co-production implies moving from technology transfer relationships to the co-production of technological solutions oriented to digital servitization. New actors, digital artifacts and changes in user practices emerge as translators of DSI processes toward digital servitization. Thus, the emergence of technological solutions must be understood as socio-technical assemblages. The firms develop digital artifacts that allow the DSI process. The role of digital service platforms and users is critical in co-production. Digital artifacts based on algorithmic technologies perform automation and augmentation routines.Originality/valueThe study provides a complementary viewpoint between DSI approaches and the literature on Routine Dynamics and Sociomateriality. It explains in a micro-founded perspective, and based on biographies of the emergence of DSI ecosystems, how the relationship between digital artifacts, human practices and routines become dynamic in the co-production of Technological Solutions. This perspective proposes that DSI processes are based on the co-production of socio-technical assemblages. Thus, sociomateriality is at the center of analyzing the role of artifacts and the networks of relationships they perform and configure with humans, generating strategies, organizational practices and heterogeneous routine dynamics.

PurposeThis paper addresses the growing fragmentation between traditional and digital service innovation (DSI) research and offers a unifying metatheoretical framework.Design/methodology/approachGrounded in service-dominant (S-D) logic's service ecosystems perspective, this study builds on an institutional and systemic, rather than product-centric and linear, conceptualization of value creation to offer a unifying framework for (digital) service innovation that applies to both physical and digital service provisions.FindingsThis paper questions the commonly perpetuated idea that DSI fundamentally changes the nature of innovation. Instead, it highlights resource liquification—the decoupling of information from the technologies that store, transmit, or process this information—as a distinguishing characteristic of DSI. Liquification, however, does not affect the relational and institutional nature of service innovation, which is always characterized by (1) the emergence of novel outcomes, (2) distributed governance and (3) symbiotic design. Instead, liquification makes these three characteristics more salient.Originality/value In presenting a cohesive service innovation framework, this study underscores that all innovation processes are rooted in combinatorial evolution. Here, service-providing actors (re)combine technologies (or more generally, institutions) to adapt their value cocreation practices. This research demonstrates that such (re)combinations exhibit emergence, distributed governance and symbiotic design. While these characteristics may initially seem novel and unique to DSI, it reveals that their fundamental mechanisms are not limited to digital service ecosystems. They are, in fact, integral to service innovation across virtual, physical and blended contexts. The study highlights the importance of exercising caution in assuming that the emergence of novel technologies, including digital technologies, necessitates a concurrent rethinking of the fundamental processes of service innovation.

The advent of digital technology has transformed traditional service management approaches and offers new opportunities for the supply chain network to resist these interruptions. However, current research on how digital service innovation directly affects supply chain resilience is limited. This study constructs a theoretical research framework to explore how digital service innovation promotes supply chain resilience in the manufacturing industry, using a network embeddedness perspective. Through extensive survey data, the research demonstrates that digital service innovation enhances resilience by fostering two types of network embeddedness, namely relational and structural embedding, which in turn enhances resistance to interruption. IT support capabilities further reinforce the relationship between digital service innovation and relational embedding and structural embedding, and enhance the overall impact on resilience. This paper is among the first to integrate digital service innovation into supply chain resilience research, unveiling a network embedding approach for enhancing the ability to respond to supply chain network disruptions.

Service innovation with digital technology such as augmented reality allows brands to deliver additional values to customers, as interactions between brand and customer improve a brand’s performance. However, there is little research on digital service innovation and its impact on customer behavior. Thus, the authors focus on digital service innovation and aim to answer whether it plays a role in positive customer response. This study examines the relationship between digital service innovation, customer engagement, and customer equity. The findings of this study show that digital service innovation helps improve customer engagement, which also leads to customer equity. Finally, the authors discuss academic and managerial implications.

Purpose As industries increasingly integrate Digital Twins (DTs) into their operations and service offerings, it becomes crucial to understand the specific technological and organizational capabilities associated with DTs and their role in effective Digital Service Innovation (DSI). This paper aims to contribute to the literature on DSI-enabling factors by examining the role of DT capabilities in driving DSI within organizations, highlighting the areas of interconnection. Design/methodology/approach This study adopts a multiple case study approach, examining two organizations with different engagements with DTs: a consultancy engineering firm offering DT solutions, and a technology company specializing in DT services for different sectors. These diverse perspectives aim to provide a comprehensive understanding of the role of DTs in DSI in different organizational contexts. Findings The study identifies distinct capabilities needed to develop and exploit DTs, as well as new capabilities acquired by organizations through DTs deployment. It reveals that several technical and non-technical DT capabilities overlap with established DSI capabilities, illustrating a logical pathway from DT capabilities to DSI. These insights are synthesized into a theoretical framework which illustrates how DT capabilities support and enable DSI. Practical implications This research delineates critical DT capabilities and highlights which of these contribute to the effective deployment of DSI. These findings provide actionable strategies for organizations aiming to develop and strengthen DT capabilities to maximize their potential impact on DSI. Originality/value This paper expands beyond the prevalent technical and engineering emphasis in DT literature by adopting a holistic capabilities-based approach. It provides an in-depth examination of how DT capabilities can drive DSI, delivering valuable insights for both academia and industry practice.

PurposeThis study aims to explore how different decision-making logics (DML) and organizational learning (OL) styles are used and combined by project managers to navigate the complexities of Digital Servitization (DS) and Digital Service Innovation (DSI) projects. Specifically, the research shows the impact and interplay between the two managerial levers OL and team-level DML, and how these influence and substitute each other.Design/methodology/approachIt builds on a retrospective longitudinal study of project-level cases within a high-tech multinational company active in the aerospace industry and applies a systematic combining approach and narrative analysis of critical, decisive events. The research zooms in on the application of OL (i.e. adaptive versus generative learning) and DML (effectuation versus causation) while coping with the experienced complexity during the implementation process.FindingsTeams seek relief from complexities during the DS/DSI journeys by combining different managerial levers over time. The paper develops a mid-range theory with propositions and outlines practical recommendations.Research limitations/implicationsThis study’s research limitations include its single-sector focus and reliance on a small number of case studies, which does not allow generalization across industries or different contexts. Future research should explore diverse industries and incorporate broader quantitative methods to validate the proposed managerial frameworks.Originality/valueA framework describing how managers alternate DML and OL styles during their DS/DSI transitions is developed. Contrary to earlier belief, the alternations of logics and styles do not follow a “predetermined sequence” as planned but are developing rather in a flexible, recurrent and emergent manner.

Digital innovation is rapidly reshaping society, affecting fundamental aspects of our everyday activities and lives. This development is accompanied with benefits as well as social dilemmas. In this paper we approach this class of challenges in IS digital innovation research. We investigate how social challenges are attended in research agendas, and reflect upon social challenges emerging from a digital service innovation project. Based on the empirical case, we present a scenario that illustrates how social challenges can unfold in digital service innovation. The case exemplifies three conflicts of interest that are used to discuss implications for the research agendas for digital innovation. We propose that explicit attention is paid to social and ethical challenges, taking a large scale and interdisciplinary approach on social and ethical challenges in digital ecosystems.KeywordsDigital innovationresearch agendassocial and ethical challengessocial dilemmas

PurposeThis paper studies the Digital Service Innovation (DSI) concept by systematically reviewing earlier studies from various scholarly communities. This study aims to recognize how recent advances in DSI literature from different research streams complement and can be incorporated into the growing digital servitization literature to define better and understand DSI.Design/methodology/approachAfter systematically identifying 123 relevant articles, this study employed complementary methods, such as author bibliographic coupling, linguistic text mining/textual analysis and qualitative content analyses.FindingsThis paper first maps the intellectual structure and boundaries of the DSI-related communities and qualitatively assesses their characteristics. These communities are (1) Innovation for digital servitization, (2) Service innovation in the digital age and (3) Adoption of novel e-services enabled by information system development. Next, the composition of the DSI concept is examined and depicted to comprehend the notion's critical dimensions. The findings discuss the range of theories and methods in the existing research, including antecedents, processes and outcomes of DSI.Originality/valueThis study reviews, extends the understanding of origins and critically evaluates DSI-related research. Moreover, the paper redefines and clarifies the structure and boundaries of the DSI-concept. In doing so, it elaborates on the substance of DSI and identifies the essential themes for its understanding and conceptualization. Thus, the study helps the future development of the concept and allows knowledge accumulation by bridging adjacent research communities. It helps researchers and managers navigate the foggy emerging research landscape.

PurposeThis study aims to develop theory on the process toward digital service innovation (DSI) and to generate insights into how companies deal with the rising complexity associated with DSI, both inside and outside of the organization, through organizational learning and alignment.Design/methodology/approachAfter purposeful sampling, in-depth, longitudinal case studies of three manufacturers are presented as illustration. Per case, multiple semi-structured interviews are conducted, and insights are validated through rich additional data gathering. Each company's DSI pathway is reconstructed with critical incident technique. Next, using systematic combining, a middle-range theory is developed by proposing a theoretical frame concerning the relations between DSI maturity, learning and alignment.FindingsThe authors posit that, as companies gradually develop and progress toward DSI maturity, they deal with a rising degree of complexity, fueling their learning needs. Companies that are apt to learn, pass through multiple cycles of learning and alignment to overcome specific complexities associated with different DSI stages, with each cycle unlocking new DSI opportunities and challenges.Originality/valueThe study applies a stage-based view on DSI combined with complexity management and organizational learning and alignment theory. It offers a theoretical frame and propositions to be used by researchers for future DSI studies and by managers to evaluate alternative DSI strategies and implementation steps.

This study examines the effect of digital service innovation on customer perceived value (CPV) of the Access by KAI application. The population in this study were consumers of the Access by KAI application. This study uses the Partial Least Squares-Structural Equation Modeling (PLS-SEM) method with SmartPLS 3 to analyze data and bootstrapping techniques to test hypotheses. Data were collected based on judgmental sampling through an online survey of 266 consumers who have transacted in the Access by KAI application. The results showed that digital service innovation significantly positively affects customer perceived value. These findings provide important insights for similar applications to continue optimizing their digital features to create better-added value for users. The study also provides valuable lessons learnt to enhance digital learning based on CPV.

Digital innovations drive an organization’s digital transformation. While numerous studies focus on digital product and service innovation, digital process innovation and novel business models, management and leadership concepts are primarily investigated as enabling framing conditions in previous contributions. However, management and leadership concepts have changed dramatically in the digital era. The rise of digital technologies has led to companies acquiring large amounts of data. Moreover, novel technical solutions facilitate the analysis and processing of this data, leading to an increase in organizational transparency. Traditional leadership theories fail to explain the influence of digitalization and increasing transparency of leadership. In a digitized world, managers often face a trade-off when using data for management purposes. On the one hand, transparency leads to decreasing information asymmetries, allowing managers to monitor employees’ actions at low cost. On the other hand, employees demand self-organization and empowerment. In this context, new forms of control and employee engagement need to be designed. With our conceptual paper, we aim to provide a solution to the challenges of using transparency in leadership in a mutually beneficial way for managers and employees by introducing the concept of “inverse transparency.” We develop the concept building on the existing literature on transparency and leadership. We see inverse transparency as the basis for a new type of digital innovation, which we introduce as digital leadership innovation. Thus, we enhance current research on leadership approaches and digital innovation and create a theoretical basis for further research.

As firms in the Schumpeterian environment of creative destruction seek to creatively edge out each other, frequent organisational capabilities’ re-invention tends to be a critical prerequisite for unlocking new capabilities to catalyse a business’ sustainability. Given the growing importance of self-disruption as an antecedent for organisational re-invention, this empirical research explores whether improved level of the optimisation of digital innovation’s generativity would leverage organisational capabilities’ re-invention to counter threats in the constantly changing Schumpeterian environment of creative destruction. Using a qualitative research method, the empirical research explored the opinions of twenty-five personnel that constituted of IT and electronics engineering personnel from five innovative IT and digitally abreast organisations in Glasgow-Scotland. The Delphi method that was accomplished in five sequential focus group discussions explored the impact of the emerging digital innovation technologies not only on new digital product or service innovations, but also on organisational capabilities’ re-invention. Although novel service and retail models as well as novel marketing approaches were found to emerge from the utilisation of different digital innovation technologies, major inhibitors of the optimisation of digital innovation’s generativity were still found to arise from deeply embedded analog business systems or the paradox of having to digitize and respond to the needs of the yet largely analog-skewed market. To address such a challenge, this study proposes a digital organisational capabilities’ re-invention model to agitate the need for most businesses to adopt digital business approaches as antecedents for leveraging the optimisation of digital innovation’s generativity. This will not only aid the creation of new products or services, but also re-invention of new capabilities to bolster a firm’s competitive edge. However, future research can still explore skills and competencies that are critical for digital innovation’s optimisation.