2. CURRENT UNDERSTANDING
OF SERVICE INNOVATION IN
SMES
2.1 Nature of and Key Concerns Regarding
Service Innovation
Service industries dominate the world economy
because of the critical influence of these industries on
GDPs; this influence creates tremendous potential for
growth and profitability [16, 24]. In general, the term
“service industry” encompasses a broad range of
services, including business trade, information
service, finance and insurance, healthcare,
accommodation, and government administration.
Regardless of the type of service, one of the main
goals of the service industry is to generate profit for
service providers [7].
To ensure that service sectors grow continually,
service innovation has gradually been implemented.
Typically, the aim of service innovation is to create
new value through service design and delivery as well
as to create new business models. Service innovations
provide two benefits for service firms: (1) service
firms can produce unique innovations, and (2) service
firms play a vital role in the evolving division of
creative labor [19].
Although service innovation has not adequately
been implemented in practice or elucidated in
research [3], systematic studies on service innovation
have been regarded as a worldwide trend and a useful
technique for businesses in the service industry [6].
However, as asserted by Voss and Husan [29], the
traditional, manufacturing-based product research and
development paradigm is no longer appropriate for
service design in the current service-oriented
economy.
Moreover, the success of service innovation
depends on a clear understanding of consumer
demands [6]. Companies that can identify customer
needs and align these needs with their core
competencies are more profitable and innovative than
those which cannot [10].
Den Hertog [8] proposed a framework
illustrating the dimensions of service innovation. Fig.
1 shows this framework, in which service innovation
is derived from four concepts: new service concepts,
new service interfaces, new service delivery systems,
and new technology options. All service innovations
are a combination of two or more of these concepts,
implying that technology is not necessary for service
innovation even when it plays a crucial role in service
innovation.
Love et al. [17] indicated that the relationships
among st service innovation, exporting, and
productivity are complex, suggesting that innovation
alone is not sufficient for generating productivity
improvements; innovation must be combined with
increased exportation activity to create productivity
gains.
In summary, service innovation is extremely
complex and warrants further consideration. In
addition to focusing on consumer demands,successful service innovation must address various
demands and concerns associated with stakeholders
within the service industry, and goals, types, and
viewpoints must be established [15]
2. CURRENT UNDERSTANDINGOF SERVICE INNOVATION INSMES2.1 Nature of and Key Concerns RegardingService InnovationService industries dominate the world economybecause of the critical influence of these industries onGDPs; this influence creates tremendous potential forgrowth and profitability [16, 24]. In general, the term“service industry” encompasses a broad range ofservices, including business trade, informationservice, finance and insurance, healthcare,accommodation, and government administration.Regardless of the type of service, one of the maingoals of the service industry is to generate profit forservice providers [7].To ensure that service sectors grow continually,service innovation has gradually been implemented.Typically, the aim of service innovation is to createnew value through service design and delivery as wellas to create new business models. Service innovationsprovide two benefits for service firms: (1) servicefirms can produce unique innovations, and (2) servicefirms play a vital role in the evolving division ofcreative labor [19].Although service innovation has not adequatelybeen implemented in practice or elucidated inresearch [3], systematic studies on service innovationhave been regarded as a worldwide trend and a usefultechnique for businesses in the service industry [6].However, as asserted by Voss and Husan [29], thetraditional, manufacturing-based product research anddevelopment paradigm is no longer appropriate forservice design in the current service-orientedeconomy.Moreover, the success of service innovationdepends on a clear understanding of consumerdemands [6]. Companies that can identify customerneeds and align these needs with their corecompetencies are more profitable and innovative thanthose which cannot [10].Den Hertog [8] proposed a frameworkillustrating the dimensions of service innovation. Fig.1 shows this framework, in which service innovationis derived from four concepts: new service concepts,new service interfaces, new service delivery systems,and new technology options. All service innovationsare a combination of two or more of these concepts,implying that technology is not necessary for serviceinnovation even when it plays a crucial role in serviceinnovation.Love et al. [17] indicated that the relationshipsamong st service innovation, exporting, andproductivity are complex, suggesting that innovationalone is not sufficient for generating productivityimprovements; innovation must be combined withincreased exportation activity to create productivitygains.In summary, service innovation is extremelycomplex and warrants further consideration. Inaddition to focusing on consumer demands,successful service innovation must address variousdemands and concerns associated with stakeholderswithin the service industry, and goals, types, andviewpoints must be established [15]
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