Measuring Perceived Service Innovation Typologies in Retail Industry

Abstract

Purpose: The study is undertaken with two objectives, first to develop a scale that can measure service innovation from customer perspective in retail industry, and second to find out how the developed service innovation measurement scale has an effect on predicting customer’s Word-of-Mouth (WOM), followed by testing the mediation effect of corporate reputation between service innovation and WOM.Methodology: The study followed the Integrated Design Approach that included qualitative studies and quantitative studies in exploring and validating the measurement items for service innovation typologies. The codes that represent the typologies of service innovation were elicited through group discussions with selected customers and validated through in-depth interviews with decision maker/managers of retail industry in different parts of South India. The approved codes were validated through two expert opinion surveys and further authenticated through quantitative approaches such as: Exploratory Factor Analysis and Confirmatory Factor Analysis with two different sets of samples. Finally, the nomological validity of the developed scale was tested on estimating its effect on Corporate Reputation and WOM.Findings: The developed service innovation scale can be adopted by both researchers and managers in measuring service innovation in retail industry. The path analysis results concluded that service innovation has positive impact on corporate reputation and WOM, where the decision makers/managers can note that if service innovations are brought in frequently, it would make the firm reputed in the market and ultimately results in positive WOM from the customers. The mediation analysis result also gives an insight that even if the service innovation is by a non-reputed retailer, it still gets positive WOM.Originality/Value: The study contributes by providing a unique scale to measure service innovation from customer perspective in retail industry, overcoming the existing Goods-Dominant logic. Further, by empirically testing nomological validity, the effect on non-financial performance is estimated to understand how innovation in services would build corporate reputation that ultimately results in customers’ positive WOM which is wanting in literature on service innovation.