Innovation at the Service Encounter in Knowledge Intensive Business Services: Antecedents and Boundary Conditions

Abstract

The service encounter is the primary interface and critical nexus between frontline employees (FLEs) and customers, where service innovation evolves. In knowledge intensive business services (KIBS), FLEs' behaviors that support service innovation at the service encounter are especially important because FLEs have to engage in ad hoc innovation at that time. Ad hoc innovation means developing unplanned service solutions that can solve a customer's ill‐structured and complex problem. Although the central role of FLEs has been acknowledged, at present, we still know little about what supports their creativity and customer‐oriented behaviors that trigger ad hoc innovation. Drawing on data from 150 KIBS firms using a multiple informant design (three respondents per firm), findings show that both internal and customer communications increase FLEs' creativity and customer orientation. Further, the results show that FLEs' creativity and customer orientation are strongly related to ad hoc innovation developed at the service encounter. In focusing on the contingency effects of transactional leadership, the results show that transactional leadership moderates the relationship between FLEs' creativity–FLEs' customer orientation and ad hoc innovation differentially. This research provides theoretical and practical implications for scholars and practitioners through unpacking the contribution of enriched service encounter on ad hoc innovation.