SERVICE
INNOVATIONS’
EXTERNAL
EFFECTS
Thesis
First Supervisor: E. Dirksen Msc.
Second supervisor: A.C.J. Meulemans Msc. Date of submission: 23th of June 2014
Ilse Haak - 10317414
Executive Programme of Management Studies Amsterdam Business School University of Amsterdam - Track: Strategy
Management Summary
Even though services play a major role in our global economy, knowledge about the effects of service innovations still lacks. Besides prior research mainly focussed on the impact service innovations have on the firm itself. The objective of this thesis is to identify at the firm-level positive and negative ex-ternal effects of service innovations for the firm’s stakeholders. The research question is: How do
service innovations create beneficial and disadvantageous effects for the firm’s stakeholders like em-ployees, customers, partners and the social and natural environment?
Semi-structured interviews have been conducted with ten entrepreneurs and/or managers from the food service industry that introduced an innovative service concept. This study applied a multidimen-sional approach to assess the impact of service innovations. Next to that, the field of service innova-tions is assessed in a new light by using insights from different research fields like the corporate so-cial responsibility literature.
The results demonstrate that service innovations lead to external effects, which consist of social - psychological, soci(et)al and economic - and environmental effects. Whereas the environmental ef-fects are a direct consequence of service innovations, the social efef-fects are an indirect result of ser-vice innovations affecting the interaction with their stakeholders. Even though the consequences slightly differ for each stakeholder, over-all beneficial external effects comprise: positive psychologi-cal, soci (et) al, economic and environmental impact and over-all disadvantageous external effects consist of: negative psychological, economic and environmental impact.
The main contribution of this paper is that it presents a framework that shows in what way service innovations create beneficial and disadvantageous effects for each of the firm’s stakeholders and a general framework of social and environmental external effects of the firm. These findings expand the sparse theoretical insights of service innovations by enriching our understanding about the im-pact of service innovations on the firm’s service ecosystem. In addition the results inform the way in which firms can enhance their social and environmental performance through service innovations.
Preface
It was quite clear that the primary subject of this thesis was supposed to be about service innovation. All ideas that appeared to me were somehow related to the concept of service innovation: business model innovation, service management / marketing, co-creation, entrepreneurship, service design. Inspired by the article of Porter and Kramer (2011) The Big Idea, Creating Shared Value and the arti-cle of Christensen, Baumann, Ruggles and Sadtler. (2011) Disruptive innovation for social change, I came up with the idea to link service innovation with social value creation.
This appeared to be quite a struggle, because the concept social value seemed a vague, unmeasura-ble concept. How can you measure the macro-impact of service innovations? This seemed undoaunmeasura-ble, until I made me profound in other literature streams like the corporate responsibility literature. Carter and Rogers (2008) and Clarkson (1995) stated that analysing the effects at the firm level can best be done by using a stakeholders’ perspective, because firms only manage relations with their stakeholders and not with society.
From that moment on I changed to a qualitative research design and decided to interview entrepre-neurs and managers in the food service industry. This seemed to be an excellent decision, since in-terviewing the entrepreneurs and managers was the best part of the thesis. All of the entrepreneurs and managers were very interested and enthusiastic and told me very openly about their service concept.
Hence I want to thank: Bilder & De Clercq, Buitengewoon In Het Land, CitizenM, De Uitvreter, Doppio Espresso, Flexotels, Hotel ten Cate, Lekker Wakker, Seats2Meet and Vapiano for their cooperation, openness and enthusiasm. Further I also want to thank my thesis supervisor Erik Dirksen for his sup-port during the process.
Ilse Haak
Content
1. Introduction ... 5 2. Literature Review ... 9 2.1 Service Innovations ... 9 2.2 Firm Effects ... 17 2.3 External Effects ... 21 3. Research Design ... 29 3.1 Research Setting ... 30 3.2 Data Collection ... 33 3.3 Data Analysis ... 35 4. The Cases ... 38 5. Results ... 44 5.1 Employees ... 44 5.2 Customers ... 48 5.3 Partners ... 53 5.4 Environment ... 57 5.5 External Effects ... 626. Discussion and Conclusion ... 68
6.1 Discussion ... 68
6.2 Conclusion ... 75
References ... 77
Appendix 1. Interview guide... 83
Appendix 2. Interview themes ... 86
Appendix 3. Coding... 87
Tables
Table 1. Cases and their service innovation ... 32
Table 2. General overview of effects of service innovations categorized per type ... 63
Table 3. Overview of core themes and subthemes based on the literature review ... 86
Table 4. Coding result after step 1 ... 87
Table 5 Coding result after step 2 ... 87
Table 6. Coding result after step 3 ... 88
Table 7. Final overview of identified codes ... 88
Figures
Figure 1. Degree of intangibility ... 11Figure 2. Degree of interactive consumption ... 12
Figure 3. A Services Value Web ... 17
Figure 4. Suggested relationship between the service innovation effect categories. ... 18
Figure 5. Scope of the research ... 30
Figure 6. Theoretical framework: effect-categories of service innovations for employees ... 44
Figure 7. Theoretical framework: effect-categories of service innovations for customers ... 48
Figure 8. Theoretical framework: effect-categories of service innovations for partners ... 53
Figure 9. Theoretical framework: effect-categories of service innovations for the environment ... 57
Figure 10. Overview of external effect-categories of service innovations for the firm ... 64
Figure 11. Theoretical framework: external effect-categories of service innovations for a firm ... 65
Figure 12. Overview of beneficial and disadvantageous effect-categories of service innovations ... 66
1. Introduction
The global economy is dominated by services, which makes that most of our (economic) progress is the result of service innovations’ efforts (Berry, Shankar, Parish, Cadwallader & Dotzel, 2006; Chesbrough, 2011; Lyons, Chatman & Joyce, 2007). It is widely conceived that services innovate in an open and iterative way: through interaction and cooperation value is created. Service innovations are hence the result of co-creating and co-producing with customers and partners and other stakehold-ers in the service ecosystem (Chesbrough 2011; Lusch, Vargo & O'Brien, 2007; Michel, Brown & Gal-lan, 2008b; Rubalcaba, Michel, Sundbo, Brown & Reynoso, 2012). Although in the service innovation literature this comprehensive view - that involves various stakeholders in the ecosystem - is applied to the process of value creation, still a more narrow view – that solely involves the firm and its
cus-tomers - is used to explain the (performance) outcomes of service innovations. Surprisingly, there is
not a full and adequate understanding of whether service innovations lead to benefits and disad-vantages for the firm’s service ecosystem.
This thesis explores external effects of service innovations, both positive and negative ones. Social and environmental outcomes are studied at the firm-network level, which means that effects for the firm’s stakeholders - employees, customers, partners and the environment - are explored. This study takes a multidimensional approach of impact assessment of service innovations, congruent with a co-production perspective of service innovations. Next to that the field of service innovations is as-sessed in a new light by using insights from other research fields like the corporate social responsibil-ity literature. The objective of this thesis is to identify at the firm-network level positive and negative external service innovations’ effects for the firm’s stakeholders: employees, customers, partners and the environment. The following research question is addressed: How do service innovations create
beneficial and disadvantageous effects for the firm’s stakeholders like employees, customers, part-ners and the social and natural environment?
Most scholars emphasise the need to research outcomes of service innovations: to investigate the relationship between service innovations and firm-performance, customer value and the impact on
other factors (Dotzel, Shanskar & Berry, 2013; Rubalcaba et al., 2012). Aas & Pedersen (2010) state that a comprehensive theory of the potential firm-level effects of innovation is not yet available.
The field is incomplete, because as far as known, the impact of service innovations on the social and natural environment of the firm has not been researched before. Concerning the social environment: the linkage between service and social innovations has not been made yet (Djellal & Gallouj, 2012; Rubalcaba et al., 2012). The researchers Djellal and Gallouj (2012) have pointed out the necessity to bring these research fields together in their article “Innovation sociale et innovation de service:
prem-ière ébauche d'un dialogue nécessaire.” Rubalcaba et al. (2012) propose to examine social innovation
in services, like service innovation and public procurement, welfare and addressing societal needs and Gago and Rubalcaba (2007) stress the need to develop more knowledge about service innova-tion and its economic and social impacts.
This gap needs to be filled to 1) complement the theoretical insights of service innovation, 2) to help managers win back trust of the public by contributing to society, while innovating their core services and 3) to inform government, NGO’s and investment-agencies about the way in which social issues can be co-solved with viable service-based business models.
First of all, the aim of this thesis is to advance scholars understanding of the concept of service inno-vation, by incorporating a missing element of the model for service innovation: the effects on the social and natural environment of firms. Service innovation is a relatively new research area. The innovation literature has been dominated by a manufactured good-centric view with a primary focus on product innovations (Dotzel et al., 2013; den Hertog, Gallouj & Segers, 2011; Lusch et al., 2007; Michel et al., 2008b). Service innovation scholars agree that this ‘old view’ of innovation is in a sense limited applicable to services and that new insights are needed to explain (service) innovation (De-manpour, Walker & Avellaneda, 2009; Dotzel et al., 2013; Lusch et el., 2007; Lyons et al., 2007; Michel et al., 2008b). Despite the fact that there is agreement on the need for new perspectives that explain the manner in which services innovate, there is no consensus yet about the conceptualization
of service innovation (Droege, Hildebrand & Forcada, 2009; Gallouj & Savona, 2009; Rubalcaba et al., 2012). As a consequence: different service innovation frameworks, from different perspectives have been developed. These theoretical models still need to be empirically validated, in order to be able to develop a prescriptive model that explains the manner to manage service innovations (den Her-tog, van der Aa & de Jong, 2010; Droege et al., 2009). Nevertheless, before consensus about the con-cept of service innovation is reached and this is translated into a prescriptive - empirically validated – model for service innovation, further research is needed into the effects of services innovations. Most prior research did focus on the characteristics or typologies and the antecedents of service innovations (Demanpour et al, 2009; Droege et al., 2009; Rubalcaba et al., 2012). There is also a need to research the outcomes of service innovations. Most pointed out is the need to study the perfor-mance effects or impacts of service innovations on firm value (profit, revenue, cost reduction) and on customer value (customer solution or experience) (Demanpour et al, 2009; den Hertog et al., 2010; Dotzel et al., 2013;. Gallouj & Savona, 2009; Rubalcaba et al., 2012). The first studies start to appear that examine the linkage between innovation and its consequences empirically. For example Dotzel et al. (2013) conducted the first study that examined the interrelationship among service innovative-ness, customer satisfaction, firm value and firm risk. As far is known, this thesis is the first study that considers the impact of service innovations on the surrounding social system of the firm.
Second, this thesis informs managers about whether innovating services can help in contributing to the social environment. For managers it is interesting to know whether they can contribute to the broader environment with their core business instead of using separate CSR programs. According to Porter and Kramer (2011) “The more business has to embrace corporate responsibility, the more it
has been blamed for society’s failures”, due to the fact that “...most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core.” In other
words, firms can gain insight in whether innovating core business can lead to benefits for society, customers, employees and partners, besides benefits for the firm. For businesses this could be a val-uable way to win back trust of the wider public and cure the relationship with society. Since
“Compa-nies are widely perceived to be prospering at expense of the broader community” (Porter & Kramer,
2011). These insights guides managers’ decision making and advances managers’ understanding about the way in which to transform to more social businesses to win back trust of the public.
Third, for the wider public like governmental-, NGO’s and investment agencies, insight in whether service innovations can have a positive impact on society, can help in encouragement of social trans-formation. For these stakeholders, these insights can help them in stimulating to solve social issues with viable service-based business models.
To explore service innovations’ social and environmental performance, qualitative research in the form of a multiple case study is conducted. Semi-structured interviews have been conducted with ten entrepreneurs and/or managers from the food service industry that introduced an innovative service concept.
This thesis is structured as follows Chapter 2 Literature Review contains theory about service innova-tions and its consequences, both from the service innovation research field and other literature streams. In Chapter 3 Research Design the research setting, data collection and data analysis method is explained. In chapter 4 the results of the interviews are presented. First a framework with the spe-cific effects per stakeholder (employees, customers, partners and the environment) is presented. Next these results are merged and a general framework of service innovations’ external effects is displayed. Chapter 5 Discussion and Conclusion discusses the theoretical implications, practical impli-cations and the limitations and directions for further research. The thesis ends with the conclusion, in which the research question is answered.
2. Literature Review
To structure the theory, the next themes are discussed separately: 1) service innovations, 2) firm effects and 3) external effects. The first part informs about what a service innovation is, the second part explains the effects of service innovations for the firm itself and the third part explains the ef-fects of service innovations for other stakeholders from the firm’s network.
2.1 Service Innovations
A general definition or conceptualisation of service innovations still lacks (Droege et al., 2009; Gallouj & Savona, 2009; Rubalcaba et al., 2012). In the empirical field of service innovation several academic disciplines converge. Each discipline adopts a distinct perspective and explores multiple dimensions, follows a unique approach and builds varied conceptual and analytical frameworks (Rubalcaba et al., 2012) In order to understand what service innovations are, the different perspectives on service in-novation are discussed in sequence of their development over time.
Technological perspective
The innovation literature is biased towards technological innovation in manufacturing (Dotzel et al., 2013; den Hertog et al., 2011; Lusch et al., 2007; Michel et al., 2008b). Innovation research has for a long time not distinguished between product and service innovations (Miles, 2001; Sirilli & Evange-lista, 1998).The prevalent view on service innovation conceptualizes services offered by firms in the service sector to be similar to products introduced by organizations in the manufacturing sector (Miles, 2001; Sirilli & Evangelista, 1998). This means that innovation insights still have their roots in the time manufacturing was still the major economic activity. Nowadays services are the major eco-nomic activity. In developed countries services compromise more than 70% of the aggregate gross domestic product (GDP) and employment (Berry et al., 2006; Chesbrough, 2011; Dotzel et al., 2013; Lyons et al., 2007; Rubalcaba et al, 2012).
Two schools of thought have their roots in the knowledge developed for manufactured good
innova-tions and apply this also to services: the assimilation and the technological approach (Coombs &
theories and concepts developed in manufacturing contexts can easily be transferred to innovation in services. In other words that product innovation is equal to service innovation (Coombs & Miles, 2000; Droege et al., 2009; Gallouj & Savona, 2009). An example of a study from this perspective is the second European Innovation Survey (CIS II), conducted in 1997, which operated with definitions and concepts for manufactured products while asking for services (Tether, 2005). This innovation survey was initiated by the European Commission to measure innovation outputs. The focus was on new or improved technological products or processes (Smith, 2005). For services, small changes were made like replacing the word product by service (Tether, 2005).
Closely related is the technological approach which exclusively sees service innovations as a result of technological improvements and progress in information technology (Droege et al., 2009). This stream is named after Barras (1986; 1990) who introduced a reversed product lifecycle for innova-tion in services (Droege et al., 2009). The Reverse Product Cycle describes the innovainnova-tion process in services. Barras (1986) states that once a new technology has been adopted, the cycle starts with process improvements to increase the efficiency of delivery of existing services, moves on to process innovations which improve service quality and then leads to product innovations through the genera-tion of new types of services.
Service perspective
More recently innovation researchers have emphasized the differences in the nature of activities of manufacturing and service organizations and state that services differ clearly from manufactured goods1 (Barras, 1990; Gallouj & Weinstein, 1997; Miles, 2001). They state that new theories and
con-ceptual models are needed to explain innovation in services (Tether, 2005; Barras, 1990; Gallouj & Weinstein, 1997; Miles, 2001). The corresponding school of thought is the demarcation stream or differentiation stream. This view states that the prevailing logic of innovations in manufacturing or-ganizations, which follow a technological trajectory, cannot be used to explain innovations in the
1 To refer to tangible offerings (as opponents of services) both the terms manufactured goods and products are
used.
service sector (Demanpour et al., 2009). It sees service innovation different from manufactured goods innovation and emphasises the distinctive features of services and service innovation (Coombs & Miles, 2000, Droege et al., 2009; Gallouj & Savona, 2009). The theories developed from this school of thought can also be related to what Rubalcaba et al. (2012) name the sectorial and activity dimen-sion as perspectives on service innovation. The sectorial dimendimen-sion focuses exclusively on innovation in the service sector (and sees it as different from manufactured goods innovation). The activity or business dimension studies service innovation as an activity, which can be applied by service and manufacturing firms (because offerings are more and more a mixture of tangible products and intan-gible services) (Rubalcaba et al., 2012).
The characteristics that distinguish services from tangible product offerings (de Brentani, 1989) are: 1) intangibility, 2) simultaneity of production and consumption, 3) heterogeneity of the service offer-ing and 4) perishability. These characteristics distoffer-inguish services from tangible product offeroffer-ings (de Brentani, 1989). Intangibility refers to the delivery of something from one party to another without the transfer of a tangible product (Aas & Pedersen., 2010). It is not a given result, but an act or pro-cess (Gallouj & Weinstein, 1997). Nevertheless, there are considerable differences between various types of services. Different type of services vary in their degree of intangibility (de Vries, van Helsdingen & Borchert, 2012). This is shown by Shostack’s (1977) intangibility continuum, figure 1. Figure 1. Degree of intangibility
The second characteristic means that production and consumption are not two distinct steps like in manufactured goods, but happen together. For example the production of a Twix by the manufac-turer and its consumption by the consumer are two separated processes. On the contrary a visit to the hair dresser, involves that the production (cutting the hair by the hairdresser) happens at the same time with consumption (the customer getting its hair cut). Simultaneity of production and con-sumption requires customer integration. This means that services require the physical presence of the customer (Berry et al., 2006; Hipp & Grupp, 2005) and involve some degree of customer partici-pation (Gallouj & Savona, 2009). It also implicates that the service delivery staff are part of the cus-tomer experience (Berry et al., 2006). In case of the hair cut the cuscus-tomer has to go to the hairdress-er and be physically present at the hairdresshairdress-er’s saloon whhairdress-ere the shairdress-ervice is delivhairdress-ered. The total ex-perience is the result of the interaction of the customer and the hair dresser, because the service is consumed and delivered simultaneously. Nevertheless, just as different type of services vary in their degree of tangibility, they also differ in interaction / simultaneity of production and consumption (de Vries et al., 2012). De Vries et al. (2012) state that services differ in the degree to which they are equipment / machine oriented and people oriented and this is related to the degree of interactive consumption, see figure 2.
Source: de Vries W. Jr., van Helsdingen P. & Borchert T. (2012). Services Marketing Management, An Introduction. Groningen/Houten: Noordhoff Uitgevers bv
The third characteristic heterogeneity, means that standardisation is difficult (Gallouj & Weinstein, 1997). Due to the fact that a service usually involves human interaction, it is difficult to replicate the experience in exactly the same way. This means that services can exhibit greater variance in perfor-mance and perceived risk (Dotzel et al., 2013). Perishability means that it cannot be held in stock (Gallouj & Weinstein, 1997) and customers cannot return it (Dotzel et al., 2013).
Gadrey, Gallouj and Weinstein (1995) defined service as “to organise a solution to a problem (a
treatment, an operation) which does not principally involve supplying a good. It is to place a bundle of capabilities and competences (human, technological, organisational) at the disposal of a client to organise a solution…” (p. 5) Examples of services are: public transport, laundry service and an
over-night stay in a hotel.
The differentiating interactive and dynamic characteristics of services do have consequences for; 1) The definition of the product: the traditional product, process, organizational innovation categories are inadequate when dealing with services (Gallouj & Savona, 2009); 2) The definition and the organ-ization of service innovation: the identification of the subjects of the innovation (the appropriation of its benefits) as well as the organizational modes are more difficult (Gallouj & Savona, 2009). 3) Meas-urement of the innovation (intensity), service productivity and effects of the innovations: effects like economic impact, improvement and change are difficult to measure (Gallouj & Weinstein, 1997; Gal-louj & Savona, 2009). 4) Protection of the innovation: protection is more difficult because services are easier to copy and there are fewer patent protections (Dotzel et al., 2013; Lyons et al., 2007), services require lower front-end capital investments and shorter product cycles (Lyons et al., 2007). Besides services are more difficult for firms to scale and store (Dotzel et al., 2013). This makes that commoditization often occurs even faster in services than in physical products. 6) The outcomes of innovation: Dotzel et al. (2013) even state that manufactured goods and services are likely to differ in customer satisfaction outcomes, financial returns, and risks: “…because goods are more easily
scala-ble than services, it may take fewer goods innovations to match the financial returns of service inno-vations.”
One of the most known scholars from the service innovation field is den Hertog. He states that “A
service innovation is a new service experience or service solution that consists of one or several of the following dimensions: new service concept, new customer interaction, new value system/business partners, new revenue model, new organizational or technological service delivery system.” (den
Her-tog et al., 2010). Already in previous work he developed a four-dimensional model of (services) inno-vation pointing out the significance of non-technological factors in service innoinno-vation activities (Droege et al., 2009). Den Hertog (2000) stated that service innovations are rarely limited to a change in the characteristics of the service product itself, they often happen together with new patterns of product distribution, client interaction, quality control and assurance etcetera (den Hertog, 2000).
Synthesis perspective
The most upcoming perspective is the synthesis research stream, which integrates or synthesises the study of innovation in services and manufacturing instead of studying both fields separately (Coombs & Miles, 2000; Droege et al., 2009; Gallouj & Savona, 2009). This stream gains more and more popu-larity among (service) innovation researchers (Coombs & Miles, 2000; Drejer, 2004; Gallouj & Wein-stein, 1997). Examples are Nijssen, Hillebrand, Vermeulen and Kemp. (2006) who studied product and service innovation similarities and differences and Aas and Pedersen (2011) who compared the effects of service innovations’ performance measures between manufacturing and service industries. The service-dominant logic (SDL) is also a widespread perspective on service innovation and has its roots in the marketing field. This discipline can be assigned to the synthesis perspective, as shown by the next citation: “All innovation, whether a service process or a tangible product, should be viewed
as a service-logic innovation.” (Michel et al., 2008b). The terms “products” and “services” are limiting
because in all cases (individually or collectively) innovation is about enabling customers to find new ways to facilitate the satisfaction of their personal needs (Michel et al., 2008b). “And any innovation
(or change) in product or process requires changes in customer thinking, participation, and capabili-ties to create and realize value” (Michel et al., 2008b).
According to SDL customers and network actors (such as suppliers and distributors) are seen as co-creators of value. All economic and social actors in the ecosystem are dynamic resource integrators and value is co-created through reciprocal service provision (Lusch et al., 2007; Michel, Brown & Gal-lan, 2008a; Perks, Gruber & Edvardsson, 2012; Vargo & Lusch, 2004). So according to this view value is created in cooperation with customers and partners through the exchange of knowledge. As stated by SDL services are defined as “the application of specialized competences (knowledge and skills)
through deeds, processes, and performances for the benefit of another entity or the entity itself”
(Vargo & Lusch, 2004). Service innovations are therefore the outcome of interfirm network- coopera-tion in so called ‘service ecosystems’. It is the result of learning in dynamic, changing environments (Perks et al., 2012). Only Value in use, value as it is defined and used by the customer, terms innova-tion (Michel et al., 2008a; 2008b). By integrating more distant knowledge and more specialised re-sources unique constellations of value can be created, which lead to discontinuous innovations (Michel et al., 2008a).
Different kind of innovations based on their degree of innovativeness can be distinguished. First of all, there are sustaining improvements. These are improvements of a current service offering by de-livering a superior solution or a substitute. These innovations improve the way in which current cus-tomer’s needs and problems are fulfilled (Michel et al., 2008b). These sustaining improvements are also called a non-market creating innovation because they do not impact the market – they keep the status quo (Michel et al., 2008b). An example is Intell Hotels Art Eindhoven. Though this hotel is like any regular hotel, they offer a superior experience because the hotel is situated in the old factory of Philips which was redesigned into a hotel. Secondly, there are innovations that reshape existing mar-kets by improve the customers’ value co-creation function (Michel et al., 2008a). This is one form of a market creating innovations, because it is disruptive to the market (Berry et al., 2006). Berry et al (2006) define market-creating service innovation as ”an idea for a performance enhancement that
customers perceive as offering a new benefit of sufficient appeal that it dramatically influences their behaviour, as well as the behaviour of competing companies”. In this case the service innovation is
the result of changing at least one of the customers’ roles: users, buyers and payer by reconfiguring value constellations (Michel et al., 2008a). An example is Netflix, it reshaped the movie rental market and changed the role of the user, buyer and payer. The user (and) buyer can stay at home and choose a movie from the couch instead of driving to the video library. Besides instead of paying per movie, the payer pays per month and can watch limitless movies. Thirdly - this is another form of a market creating innovations - there are innovations that create new markets. This is realized by mak-ing value propositions to non-customers (Michel et al., 2008a). The service offermak-ing claims an unoc-cupied market space in which latent needs remain unfulfilled (Michel et al., 2008b). In that case the innovation is a new solution for an unrecognized need (Michel et al., 2008b). An example is Green-wheels (and similar companies) that offers (short term) car rental for people that live in the city and do not own a car.
The SDL perspective can be related to: the agent dimension, open innovation and creation or co-production. The agent dimension is another perspective Rubalcaba et al. (2012) distinguish to define service innovation. “A service innovation can be the outcome of innovation networks in which
differ-ent agdiffer-ents cooperate to coproduce a service-based innovation result” (Rubalcaba et al., 2012).
Chesbrough (2011) states that open innovation is also applicable to services. Open innovation refers to “ways of sharing with others and inviting their participation” (Chesbrough, 2011). Chesbrough (2011) proposes a service value web instead of Porters value chain. He states that the old thinking of transforming inputs into outputs among a linear process and adding service as a last step, does not work anymore. Value creation is an iterative process that involves the customer and results in a cus-tomer experience. The service web is presented in figure 3. Consistent with SDL, the agent dimension and open innovation, innovations are thus the result of behaviours and interactions between individ-uals and organizations from the ecosystem and surrounding networks (Chesbrough, 2011; Perks et al., 2012).
All these disciplines apply an evolutionary perspective on service innovations. It involves that to study service innovations the proper unit of analysis is not the service offering, but the service
sys-tem (Rubalcaba et al., 2012). These perspectives also cover the subject of creation / co-production, because this is the process through which the innovation is generated.
Figure 3. A Services Value Web
2.2 Firm Effects
In this part the effects of service innovations for the firm are explained. Few studies have been con-ducted that focused on performance outcomes of service innovations (Aas & Pedersen, 2010; Laforet, 2013). Most studied are the outcomes on the product, service or process itself (Laforet, 2013). There are two explanations for this. First of all, it is more difficult to measure performance results of services than of tangible products. As a consequence of the intangible nature of services, the effects of services innovations are less visible and because of that more difficult to trace than the results of product innovations (Aas & Pedersen, 2011; Laforet, 2013). Secondly, (financial) perfor-mance effects of innovation are mostly studied related to tangible products (Lei Lin, 2013; Cainelli, Evangelista & Savona, 2004). First the categories of the firm-level service innovation effects based on the literature review of Aas and Pedersen (2010) will be presented. Then articles that applied a mul-tidimensional perspective, while studying service innovation effects are discussed.
Source: Chesbrough, H. (2010). Open Services Innovation, presentation of the book, p.17. Haas School of Business, UC Berkeley
Categories of service innovation effects
Aas and Pedersen (2010) divided the firm-level service innovation effects into five categories: 1) business process effects 2) capability effects 3) relationship effects 4) financial performance effects and 5) competitiveness effects, see figure 4.
Figure 4. Suggested relationship between the service innovation effect categories.
Aas and Pedersen (2010) propose that: 1) The effect categories are causally related; 2) Business pro-cess, capability, relationship and external effects are potential direct effects of the service innovation process. 3) Financial performance and competitiveness effects are probably indirect service innova-tion effects caused by effects in other categories (Aas & Pedersen, 2010). Though Lei Lin (2013) found proof for the fact that service innovations directly and indirectly affect financial firm perfor-mance. The categories of the model are explained subsequently.
The first category is about changes in business processes of the firm due to service innovations. These involve internal business process effects, service delivery capacity effects, internal cost effects, productivity effects, flexibility effects and risk reduction effects (Aas & Pedersen, 2010). For example effects like an increase of the productivity or a decline of operational cost (Aas & Pedersen, 2011). The second category includes effects of service innovations that improve or strengthen the firm’s
Source: Aas T.H. & Pedersen P. E. (2010). The firm-level effects of service innovation: a literature review. International Journal of Innovation Management, 14 (5), 777
internal capabilities like: learning effects, culture effects, employee growth (increase in the number of employees) and employee satisfaction effects (Aas & Pedersen, 2010). Also Gago and Rubalcaba (2007) mention the effect change in the number of employees and the impact on employment and skills (the qualification of skills needed) of service innovations. Relationship effects refer to effects on the innovator’s relationship with other stakeholders, primarily customers. These effects include ef-fects on customer’s value, customer satisfaction, customer loyalty, lock-in, image, business partner relationship and service quality effects. Customer value effects can be further divided into effects on the customer’s competitiveness, internal process and perceived value (Aas & Pedersen, 2010). The elements of the category relationship effect are close related to what Blazevic & Lievens (2004) label as ‘non-financial performance’ effects. These are effects, that opposing to financial performance effects, deal with a long-term operational performance (Chen, Tsou & Huang, 2009). Interestingly Avlonitis, Papastathopoulou. & Gounaris (2001) found that the most innovative new services con-tribute most to non-financial performance (customer loyalty, attracting new customers and image and reputation effects for the firm). The third category is financial performance effects. Chen et al. (2009) state that “Financial performance refers to a measure how well a firm uses assets from its
primary mode of business to generate revenues”. Financial firm performance effects include general
financial performance, market share, sales of new services, sales of existing manufactured goods or services and effects on the market value of the firm (Aas & Pedersen., 2010). The last category are effects related to the competitiveness of the firm like effects on the competitive position, effects on the ability to survive, creation of new markets and strategic performance effects (Aas & Pedersen, 2010).
A category of firm-level effects that Aas and Pedersen (2010) do not mention in their model are what Gago and Rubalcaba (2007) name impacts from an organizational innovation. These include: A) Ex-pansion in the number of premises/establishments (multi-location). B) Decentralization of tasks. C) Task specialization. D) Promotion of networking/strategic alliances. E) Higher levels of department
autonomy. F) Outsourcing of routine tasks. G) Outsourcing of non-routine (advanced) tasks. H) En-terprise re-location. I) Relocation of certain activities (partial relocation).
Multi-dimensional assessments of service innovation effects
According to Avlonitis et al. (2001) new service performance is frequently named a multidimensional construct. A few empirical studies have been found that investigated (service) innovation effects using a multidimensional approach for impact assessment. This means incorporating several effect-categories, for example financial effects (e.g. the effect on profit) and relationship effects (e.g. the effect on customer loyalty).
First of all, Avlonitis et al. (2001) divided firm performance into financial and non-financial perfor-mance. They tested six different types of service innovations on several performance-items. The fi-nancial performance items included profit, sales and market share effects and the non-fifi-nancial per-formance-effects included company image, building loyalty among existing customers, attracting new customers (Avlonitis et al., 2001). Chen et al. (2009) used the same effect categories and studied the impact of service delivery innovation.
Secondly, Gago and Rubalcaba (2007) studied product, process and organizational impacts of innova-tions at the same time. They state that due to the distinctiveness of service innovainnova-tions (and its co-creative character), traditional performance indicators like sales, cost, productivity, employment and turnover will not capture the whole picture and also intangible aspects like quality, trust, timing, motivation need to be incorporated (Gago & Rubalcaba, 2007). Besides impact-dimensions like productivity and costs, product or market expansion, they also included the dimensions employment and skills, service quality and environment (Gago & Rubalcaba, 2007).
Thirdly, though the studies of Laforet (2013) and Simpson, Siguaw and Enz. (2006) are not particular-ly focused on the consequences of service innovations, interestingparticular-ly they included both positive and negative outcomes. Both state that the literature on innovation effects is characterised by a bias toward positive results and unintended (negative) outcomes of innovations are neglected (Laforet,
2013; Simpson et al., 2006). Simpson et al, (2006) explored from a broad perspective innovation ori-entation positive and negative outcomes. The innovation oriori-entation positive outcomes are more, faster, and higher quality innovations, along with employee-, customer- and competition-related advantages, and operational excellence. The negative outcomes include too many unwarranted changes, market risks, employee dissatisfaction and increased costs (Simpson et al., 2006). Laforet (2013) studied organizational innovation (OI) outcomes in SMEs and also took a more comprehensive perspective on outcomes of innovations. She incorporated potential positive and negative outcomes. Her results show that (product and service) innovations result in benefits like enhanced productivity, margin, market leadership, improved working environments and in the risk of (negative outcome) operating outside the core competency. The innovations did not lead to enhanced operational effi-ciency, employees’ retention and an adverse environmental impact (Laforet, 2013).
2.3 External Effects
Aas and Pedersen (2010; 2011) state that service innovations may have external effects (like envi-ronmental effects and effects on industry structure), which may indirectly influence the firm’s finan-cial performance and competitiveness. They found that service innovations may have different ef-fects on stakeholders than on the firm and state that “further research is needed to explain the
rela-tionship between external and firm-level effects of service innovation” (Aas & Pedersen, 2010). Also
other service innovation scholars pointed out this need to investigate the social and societal impact of service innovations (Djellal & Gallouj, 2012; Gago & Rubalcaba, 2007; Rubalcaba et al., 2012).
Service innovation literature
Although, as far as known - no service innovation research has been conducted which takes a com-prehensive perspective in the assessment of potential external social and environmental effects, some researchers included one or several social and environmental elements. The external effects include social effects that impact employees, customers, partners and social environment and envi-ronmental effects, which will be discussed next.
Service innovations’ effects that impact employees have been investigated by Gago and Rubalcaba (2007) and Laforet (2013). Gago and Rubalcaba (2007) included in their dimension of Employment and Skills a sub-construct higher levels of employees’ motivation. Laforet (2013) found that innova-tions lead to better working environments, but not to employee retention (though their results showed a significant difference between sectors). Their construct working environment and safety compromised the items: employees can use their creative thought more, it enriches the whole work experience, encourage team work, opportunities for greater development of employees as result of innovation, physical safety issues better addressed after implementing new product innovations (Laforet, 2013). The learning effects Aas and Pedersen. (2010) mentioned in their literature review, (based on the research of Blazevic and Lievens (2004)) were based on project learning during the service innovation process (and thus from a firm-perspective). Zhou, Yong, Zhilin, and Nan. (2005) investigated the relationship between market and innovation orientations and their effects on em-ployees’ psychological outcomes. Based on their survey among employees they found that both mar-ket and innovation orientations strongly improve employees’ job attitudes, such as job satisfaction, organizational commitment, and confidence in their firm’s future performance (Zhou et al., 2005). Also Simpson et al., (2006) studied effects of innovation-orientation, by conducting interviews with high-level executives and entrepreneurs. Based on their results they propose that innovation-orientation leads to employee-advantages like greater enjoyment, self-fulfilment and job satisfaction (and this higher employee-morale benefits the firm with employee recruitment, performance and retention) (Simpson et al., 2006). At the same time they propose that it can also lead to negative employee effects like job stress and job dissatisfaction (which affects the firm with high turnover) (Simpson et al., 2006).
Service innovation effects that impact customers have been investigated by Dotzel et al. (2013). They tested customer satisfaction and firm value as dependent variables for service innovations that are enabled by the Internet (e-innovativeness) or by people (p-innovativeness). They found asymmetries between these two categories of service innovations; only in human-dominated industries
p-innovativeness had a positive significant effect on customer satisfaction (through which firm value was created). E-innovativeness had a direct effect on firm value and no significant effect on customer satisfaction (Dotzel et al., 2013). Also Simpson et al. (2006) found that innovations enhance customer advantages like customer satisfaction (and for the company customer loyalty and enhanced image).
No articles have been found that studied the effects of service innovations on other stakeholders like partners and the social environment.
Referring to environmental impact, Gago and Rubalcaba (2007) measured the fulfilment of ecological and sanitary standards and regulations and Laforet (2013) adverse environmental impact of service innovations. Laforet (2013) did not find an adverse environmental impact of the (product and ser-vice) innovations.
Other academic disciplines
Though social and environmental effects have not been researched from the service innovation liter-ature, other research streams do consider these effects. This encompasses research fields focusing on: sustainability, corporate social responsibility (CSR), corporate social performance (CSP), stake-holder theory, social entrepreneurship, social innovation and shared value. These empirical domains have in common that they discuss firm performance in a wider perspective than just economic wealth-creation.
First of all, there is the sustainability literature. Sustainability is defined as the ability to "meet the
needs of the present without compromising the ability of future generations to meet their needs."
(WCED, 1987). Sustainability has to do with effectively balancing organizational responsibilities to multiple stakeholders such as shareholders, employees, organizations in the supply chain and broad-er stakeholdbroad-ers including society and the natural environment (Cartbroad-er & Rogbroad-ers, 2008). In this stream the concept of the triple bottom line was introduced by Elkington (1994; 1998) as ‘win-win-win busi-ness strategies’. The triple bottom line stands for simultaneously balancing economic (profit), envi-ronmental (planet) and social performance (people) (Carter & Rogers, 2008; Elkington, 1998; Hart et
al., 2003; Gimenez, Sierra & Rodon, 2012). Carter and Rogers (2008) conclude based on their litera-ture review of sustainability that organizational sustainability, at a broader level, consists of three components: the natural environment, society, and economic performance. Mentioned is environ-mental and social sustainability. Environenviron-mental sustainability is about the use of natural resources and the footprint companies leave behind (Gimenez et al, 2012). Outcome measures are for example waste reduction, pollution reduction, energy efficiency, emissions reduction, a decrease in the con-sumption of hazardous/harmful/toxic materials, a decrease in the frequency of environmental acci-dents (Gimenez et al., 2012). Social sustainability is about considering both internal and external communities (Pullman, Maloni & Carter, 2009). Outcome measures are for example: providing equi-table opportunities, encouragement of diversity, ensure the quality of life and provide democratic processes (Gimenez et al., 2012). According to Hart, Milstein and Caggiano (2003) sustainability is a multidimensional construct and value has to be created through all the four drivers at once; 1) by reducing the level of material consumption and pollution 2) by operating at greater levels of trans-parency and responsiveness, as driven by civil society 3) through the development of new disruptive technologies that hold the potential to greatly shrink the size of the human footprint on the planet and 4) by meeting the needs of those at the bottom of the world income pyramid in a way that facili-tates inclusive wealth creation and distribution (Hart et al., 2003).
Related to the concept of sustainability, are the concepts of CSP, CSR and corporate social respon-siveness (Clarkson, 1995; Wood, 2010). According to Wood (2010) CSR relates to the firm’s principles which offer guidance. Carroll (1979) states that firms have economic responsibility to investors and consumers, legal responsibility to the government or the law, ethical responsibilities to society and discretionary responsibility to the community. Social responsiveness relates to the processes by which the firm connects itself to information, stakeholders and social issues (Wood, 2010). According to Carroll (1979) firms should be concerned with social issues like consumerism, environment, dis-crimination, product safety, occupational safety and shareholders. CSP relates to business activities (the principles and processes) focusing on the impacts and outcomes for society, stakeholders and
the firm itself (Wood, 2010). CSP concerns social, cultural, legal, political, economic and environmen-tal harms and benefits that result from an organization’s interactions with its larger environment (Wood, 2010).This perspective of CSP is derived from a perspective on organizations as organic open systems, connected to a larger environment (Wood, 2010).
Clarkson (1995) states that three different levels should be distinguished: an institutional, organiza-tional and individual level. The instituorganiza-tional level studies business in relations to society and concerns CSR and social responsiveness. At the organizational level the firm and its stakeholder groups can be studies and concerns CSP. He states that it is important to differentiate between social issues and stakeholder issues, because firms only manage relations with their stakeholders and not with society (Clarkson, 1995). Stakeholder issues are of concern to one or more stakeholder groups, while these issues are not necessarily of concern to society as a whole (Clarkson, 1995). The individual level is about managers who manage stakeholder issues and relationships with stakeholders, which concerns analysing and evaluating management performance (Clarkson, 1995). In conclusion, Clarkson (1995) states that in order to evaluate CSP at the firm level this can best be done by using a stakeholders’ perspective. Stakeholder theory describes a firm as an open and flexible nexus of diverse actors (Maignan & Ferrell, 2004). Stakeholders are groups or individuals who can affect or are affected by a firm’s objectives (Clarkson, 1995). Clarkson (1995) distinguishes between primary and secondary stakeholders. Shareholders, employees, suppliers, customers, community residents and the natural environment are primary stakeholders (Clarkson, 1995). They have invested something of value in the firm, which makes that they bear some form of risk and without the participation of these stake-holders the organization cannot survive (Clarkson, 1995). Secondary stakestake-holders still influence or are influenced by the firm, but they are not engaged in transactions with the firm and are not essen-tial for its survival, for example the media (Clarkson, 1995).
A literature stream that also considers social and/or environmental value creation is the field of so-cial entrepreneurship. Different from sustainability and CSP, the soso-cial entrepreneurship literature
studies social enterprises. Social entrepreneurs or enterprises can be individuals, groups, networks, organizations or private-public partnerships (Munshi, 2010). Although there is not agreement on the definition of social entrepreneurship, according to Dacin, Dacin & Matear (2010) the definitions focus on four key factors: the characteristics of the social entrepreneur, their operating sector, the pro-cesses and resources they use and the primary social value creation mission and outcomes. The last category which focuses on providing social value appears to be a common theme across the majority of social entrepreneurship definitions (Dacin et al., 2010) and has according to Dacin et al. (2010) the most potential. From that perspective social enterprises are firms that seek business solutions to solve social problems (Dacin et al., 2010). They are a mixture of profit-maximizing businesses and non-profit organizations to fulfil social objectives (Yunus, Moingeon & Lehmann-Ortega, 2010). Since social enterprises are characterized by a social mission through which value creation is generated (Munshi, 2010) and they are financially self-sustaining (Yunus et al., 2010). The purpose is social val-ue creation at the system level, to solve societal issval-ues, to catalyse social change and/or address so-cial needs (Dacin et al., 2010; Mair & Martí, 2006; Munshi, 2010). Outcomes or effects are thus soso-cial change, social benefits and/ or social change. This is realized by looking for novel ways, by innovative use and combination of (scarce) resources in order to realize pattern breaking change or maximize social impact (Mair & Martí, 2006; Munshi, 2010). Christensen et al. (2011) names this catalytic inno-vations, which are a subset of disruptive innovations distinguished by their primary focus on social change. Characteristics of catalytic innovations are: 1) social change is created through scaling and replicating 2) they serve an over served or underserved need, 3) the solutions (products and services) are simpler and less costly but users perceive them to be good enough 4) they generate resources which are initially unattractive to incumbents and 5) they are often ignored or encouraged by exist-ing players (Christensen et al., 2011). In other words social value is created through social innovation.
Social innovations have significant impact on social performance. Pol and Ville (2009) terms an inno-vation social if it improves either the quality of life (well-being of human kind) or the quantity of life (longevity) (Pol & Ville, 2009). Social innovations have the purpose to create better futures and not as
a primary purpose to make money (Pol & Ville, 2009). Although social innovations are not the same as business innovations. (Djellal & Gallouj, 2012; Pol & Ville, 2009), according to Djellal and Gallouj (2012) service innovations and social innovations share similarities. Especially because most social innovations are service innovations (Djellal & Gallouj, 2012). Both service and social innovations are characterized by openness, a high degree of invisibility, informal processes and interaction (co-production), appropriation regime issues and failure / inadequacy of public support policies (Djellal & Gallouj, 2012). Djellal and Gallouj (2012) suggest to consider five types of performance effects: indus-trial and technical, market and financial, relational, civic (equality, fairness, justice) and reputational performance. Business and social innovations are partially overlapping constructs. In case they over-lap (when social innovations are self-sustaining) they can be named bifocal innovations (Pol & Ville, 2009).
One can state that (self-sustaining) social businesses create shared value through bifocal innovations. The concept of ‘shared value’ is proposed by Porter and Kramer (2011). They state that shared value is about creating economic value in a way that also creates value for society. There are three levels to link economic and social progress: 1) reconceiving products and markets, 2) redefining productivity in the value chain and 3) enabling local cluster development (Porter & Kramer, 2011). Areas for shared value creation are: water & energy use, employee health, employee safety and skills, supplier viabil-ity and environmental impact. According to Pfitzer, Bockstette & Stamp (2013) companies that create shared value are characterized by their dependence on five mutually reinforcing elements: embed-ding a social purpose, rigorously defining the social need, measuring the social and business value, creating the optimal innovation structure and co-creating with external stakeholders.
To conclude: the demarcation, assimilation and synthesis approach can be used to conceptualize service innovations. Service innovations can be perceived as identical to product innovations, as re-lated to the sector, activity or the outcome of an interactive-process between network actors. Ser-vice innovation effects for the firm contain business process, capability, relationship, financial
per-formance and competitiveness effects (Aas & Pedersen, 2010). Only a few studies applied a multidi-mensional perspective and incorporated negative effects while studying consequences of (service) innovations. Based on the literature review it appears that solely limited studies have been conduct-ed that incorporatconduct-ed effects that benefit or harm the firm’s stakeholders instead of the firm itself. Impact on the working environment and job satisfaction for employees, impact on customer satisfac-tion and environmental impact are elements that have been studied. No studies have been found that studied the impact on partners and the social environment. One can conclude that there is a gap in the service innovation literature. A proper analysis of consequences (benefits and harms) of ser-vice innovations for the firm’s stakeholders has not been made before. This makes that the research question is: How do service innovations create beneficial and disadvantageous effects for the firm’s
stakeholders like employees, customers, partners and the social and natural environment? Though
social and environmental effects have hardly been researched from the service innovation literature, other academic disciplines do consider these effects. Concepts like sustainability, CSR, CSP, stake-holder theory, social entrepreneurship, social innovation and shared value discuss firm performance in a wider perspective than just economic wealth-creation. They have in common that they consider the firm as organic or network-systems, close related to their stakeholders, society and the environ-ment.
3. Research Design
The next themes are discussed to explain the research design: 1) the research setting, 2) the data collection and 3) the data analysis method.
Based on the literature review concluded was that a proper analysis of consequences (benefits and harms) of service innovations for the firm’s stakeholders has not been made before. Therefore the objective of this thesis is to identify at the firm-network level positive and negative external service innovations’ effects for the firm’s stakeholders: employees, customers, partners and the environ-ment, see figure 5. The research approach that is used is induction because this thesis aims to elabo-rate existing theory by exploring new dependent variables of service innovations (Saunders & Lewis, 2012). Aas and Pedersen (2010) proposed a model of effect categories of service innovations at the firm level, but this model does not include external effects of service innovations. By incorporating social and environmental outcomes of service innovations, this study aims to develop the model. This is realized by assessing the topic of service innovation in a new light, by using insights of outcomes innovations from other academic disciplines. These involve sustainability, CSR, CSP, stakeholder the-ory, social entrepreneurship, social innovation and shared value. The level of analysis of this study is the firm-network level since; 1) to study service innovations the proper unit of analysis is not the service offering, but the service system (Rubalcaba et al., 2012), 2) a comprehensive theory of the potential firm-level effects of innovation is not yet available (Aas & Pedersen, 2010) and 3) from the sustainability perspective we learn that measurement of macro impact is difficult to apply (Carter & Rogers, 2008).
This study takes a multidimensional approach of impact assessment of service innovations. This is in line with SDL, a co-production / co-creation perspective, open innovation and the agent dimension of service innovations. Cross-sectional qualitative research is conducted, in the form of semi-structured interviews to answer the research question: How do service innovations create beneficial and
disad-vantageous effects for the firm’s stakeholders like employees, customers, partners and the social and natural environment?
In figure 5 the scope of this thesis is summarised by the blue rectangles:
Figure 5. Scope of the research
3.1 Research Setting
Population
To study the social and environmental outcomes of service innovations, the population of this thesis is defined as: “enterprises that introduced a service innovation, which is new to the food service
in-dustry in The Netherlands”. The food service inin-dustry includes hotels, restaurants, cafés, caterers and
retail concepts with a food / drink element. Chosen is for the food service industry because this is a typical low tech service industry. Innovation research and management is still underestimated for this industry, due to a bias towards technological innovation in manufacturing, (den Hertog et al., 2011). According to den Hertog et al. (2010) a service innovation is a new way of creating value for the customer and can consist of a new service, a new service portfolio and/or a new service process. A service innovation is defined as: “…a new service experience or service solution that consists of one
or several of the following dimensions: new service concept, new customer interaction, new value system/business partners, new revenue model, new organizational or technological service delivery
Se
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Firm effectsbeneficial & disadvantageous effects for the firm itself
External effects:
beneficial & disadvantageous effects for the firm's social & natural
environment
Beneficial & disadvantageous effects for employees
Beneficial & disadvantageous effects for customers
Beneficial & disadvantageous effects for partners
Beneficial & disadvantageous effects for the (social and natural)
system.” (den Hertog et al., 2010). The service innovation can be either incremental or radical, as
long as it is new to the food service industry in The Netherlands.
Case study design
Several enterprises in the food service industry are studied sequentially. Chosen is for a multiple case study design, since multiple cases are expected to generate more information for this first explora-tion of external effects. Besides multiple-cases corroborate generalizability (external validity) (Gib-bert & Ruigrok, 2010). In each participating case the entrepreneur / founder or general manager is interviewed. Expected is that they have the best site to overview the service innovation and its con-sequences for the direct stakeholders of the firm (Simpson et al., 2006). Chosen is for a single unit of analysis, since the purpose is to include all social and environmental dimensions in the impact as-sessment of the service innovation. The alternative to interview all the stakeholders themselves has as a disadvantage that if one of the stakeholder does not participate or cannot be reached, the pur-pose to do a complete multidimensional social and environmental effect analysis, will not be reached.
Sample
A sample of ten enterprises of the food service industry is assembled. A non-probability method for sampling is chosen. This fits best to the research question because there is not an overview of the total population (Saunders & Lewis, 2012). Cases are selected based on the judgment whether they help to answer the research question, which is called purposive sampling (Saunders & Lewis, 2012). Typical cases are approached which are illustrative and representative for the population (Saunders & Lewis, 2012). This means that the sample consists favourably of a mixture of innovated service dimensions and type of firms from the food service industry. This sampling method fits best to the research objective and question, because service innovations are difficult to trace due to the intangi-ble nature of both services and innovation (Aas & Pedersen, 2011; Djellal & Gallouj, 2012; Laforet, 2013).
To identify typical cases, the internet is searched and professionals with sight on innovation in the food service industry are consulted. This involves entrepreneur-websites and/or Innovation or Entre-preneur Awards on the internet like sprout.nl, thenextentreEntre-preneur.nl and the website horecain-spiratie.nl. An expert in the field of (service) innovations and people currently working in the food service industry and/or having a degree in hotel education have been consulted.
The succeeding criteria have been used to assemble the sample; 1) The firm is active in the food ser-vice industry and its primary offer is a serser-vice, by preference in a business to consumer context. 2) The primary purpose of the firm is profit-generation. Excluding social enterprises with a social or environmental mission allows to explore (unintended) external effects of service innovations in regu-lar service enterprises. 3) Preferably, the firm has at least one employee and one partner in order to conduct a multidimensional impact assessment. 4) The service innovation was introduced between one to ten years ago. Long enough – but not too long - to observe and report the effects of the intro-duced service concept. 5) The firm is located in The Netherlands. Potential cases that obey to the five sampling criteria, have been directly approached either by telephone of e-mail. The purpose of the thesis is explained to them and they are invited to participate in this research. A summary of the cases and their characteristics (why they fit the research question) is presented in, table 1. In chapter 4 the cases are described in more detail.
Table 1. Cases and their service innovation
Company Type of firm Interviewee Service concept Type of innovation
Lekker Wakker Restaurant Manager Every night a live jazz music per-formance during dinner. Dining around the stage.
New customer experience. New service concept and new business partners (musicians). Flexotels Hotel / events Entrepreneur /
founder / Man-ager
Rent of flexible collapsible hotel rooms on sport and music events for more comfort.
New customer solution. New service concept, new organi-zational delivery system. Hotel ten Cate Hotel Entrepreneur /
founder / man-ager
Art-hotel in Toyistic2 style: the façade of the hotel is a Toyistic artwork and the hotel is decorated inside with Toyistic art.
New customer experience. New service concept. De Uitvreter Restaurant Entrepreneur /
founder / man- Table d’hôte concept: sharing dinner with other guests on a large New customer solution. New service concept, new
organi-2 Toyism “Toy stands for play things and isme for movement. It is a worldwide art-movement that makes art in
a creative, childish way, but with a deep-seated societal background.” Toyism is originated in Emmen and the
artists (Toyisits) operate as a collective. (Source: Hotel ten Cate)
ager table, one menu for a fixed price. zational delivery system, new customer interaction, new revenue model.
CitizenM Hotel Manager Self-service concept for global nomads: being more efficient than competitors and better need satis-faction. Price based on supply and demand.
New customer solution. New service concept, new cus-tomer interaction, new or-ganizational and technologi-cal delivery system, new revenue model. Doppio
Espres-so Espresso bar Entrepreneur / founder / man-ager
Coffee bar facilitating the trend to publicly meet, work and cooperate, by offering quality coffee food and free WI-FI.
New customer experience. New service concept. Vapiano Restaurant Manager Self-service Italian restaurant with
fresh food for a reasonable price and design.
New customer solution. New service concept, new cus-tomer interaction, new or-ganizational and technologi-cal delivery system. Bilder & De
Clercq (Food)retail Entrepreneur / founder / man-ager
Recipe-based shopping, offering all the needed fresh ingredients in the needed quantity.
New customer solution. New service concept and new organizational delivery sys-tem.
Buitengewoon
In Het Land Caterer Manager Outdoor dinners: sharing quality dinner on a large table in the mid-dle of the nature.
New customer experience. New service concept, new business partners, new organ-izational delivery system and new revenue model. Seats2Meet Conference
centre & work spaces
Manager & service em-ployee
Rent of conference rooms and work spaces. Creating of a social value network: linking profession-als and stimulate sharing of knowledge Price based on supply and demand and per visitor instead of per room.
New customer solution. New service concept, new organi-zational and technological delivery system, new revenue model and new customer interaction.
3.2 Data Collection
Research instrument
Data are collected by using the research strategy of structured interviews. These are semi-standardised interviews with entrepreneurs / founders or managers. The semi-structured interviews give the possibility to explore their perception of the social and environmental outcomes of their service innovations. There are several explanations why semi-structured interviews fit best to the research question and objective of this thesis. First of all, semi-structured interviews fit well with exploratory research designs (Saunders, Lewis & Thornhill, 2009). There is certain knowledge about service innovations’ effects, which leaves room enough to gain new insights. Second, semi-structured interviews give the possibility to gain in-depth information and assure that certain themes are cov-ered (Saunders et al., 2009). This gives the opportunity to enclose all the primary stakeholders of the firm and to include potential effect categories identified by other literature streams, while at the
