Challenges and Effects of Service Innovation

Abstract

The unique characteristics of services (heterogeneity, inseparability, non-storability, etc.) make service innovation more difficult and challenging than product innovation. Services, in comparison to products, are more information intensive. Service dominant logic highlights the challenges of service innovation at business level only. However, challenges of service innovation extend beyond business level and can be found at policy level, industry level and at firm level as well. Further, it is important for the marketers to understand the effect service innovation has on firms' performance and on the behaviour of customers. Hence, effects of service innovation at the firm level, market level and at the customer level are also discussed in the paper by reviewing the studies conducted in the related subject matter. This paper also provides insights for future research in the topic.