The Effects of Service Orientation, Technology Orientation and Open Innovation on the Performance of Software-intensive Service Businesses

Abstract

Our analysis of data from 179 software firms reveals how they react to industry-wide shifts including increasing service-intensity, changing technologies and the growing openness of innovation. Firms' strategic responses to these shifts explain a significant amount of their business model performance. Service orientation is connected with customer proximity strategy, which has a greater positive effect on the firms' short-term financial performance than on market performance. Firms' engagement in open innovation fosters their product uniformity strategy, which influences positively on their long-haul market performance. Technological capabilities and response to technology changes drive customer- and product-focused service development. They result in positive financial and market performance effects. Firms in service industries benefit of our results in designing and managing their service business models.