Service innovativeness and firm value JMR 2013
by Thomas Dotzel, Venkatesh Shankar, and Leonard L. Berry
This article was published in Journal of Marketing Research.
Service innovativeness, or the propensity to introduce service innovations to satisfy customers and improve firm value at acceptable risk, has become a critical organizational capability. Service innovations are enabled primarily by the Internet or people, corresponding to two types of innovativeness, e- and p-innovativeness. The authors examine the determinants of service innovativeness and its interrelationships with firm-level customer satisfaction, firm value, and firm risk and investigate the differences between e- and p-innovativeness in these relationships. They develop a conceptual model and estimate a system of equations on a unique panel data set of 1,049 innovations over five years, using zero-inflated negative binomial regression and seemingly unrelated regression approaches. The results reveal important asymmetries between e- and p-innovativeness. While e-innovativeness has a positive and significant direct effect on firm value, p-innovativeness does not. P-innovativeness has an overall significantly positive effect on firm value through its positive effect on customer satisfaction, but only in human-dominated industries. Both e- and p-innovativeness are positively associated with idiosyncratic risk, but customer satisfaction partially mediates this relationship for p-innovativeness to lower this risk in human-dominated industries. The findings suggest that firms should nurture e-innovativeness in most industries and p-innovativeness in human-dominated industries.