Innovation types and innovation management practices in service companies

Abstract

Purpose: The purpose of this study is to investigate the different types of innovation that are predominant in companies in the UK services sector, the degree of innovativeness, the practices associated with the pursuit of innovation and their relationship with company performance. Design/methodology/approach: The empirical phase of the study was conducted using a two‐stage process initiated by interviews and completed with mail surveys. Interviews were held with six senior executives of leading service companies in the UK. 214 senior managers of UK service companies were surveyed. The response rate was 47 per cent. Relevant statistical analytical techniques including regressions were used to analyse the data. Findings: Product innovations are emphasized more in telecommunications and financial sectors than in transport and retail sectors while service innovations are emphasized more in retail and transport sectors. Radical and incremental innovations were found to be related to innovation performance. Radical innovations were also found to be related to innovation management practices. Practical implications: Service companies need to pursue radical, me‐too and incremental innovations. Formal practices and processes must not be limited to the pursuit of radical innovations. Service companies must also recognize the pursuit of incremental innovations formally in their innovation strategies and define formal process for implementing these types of innovation. Originality/value: The finding that formal practices are set up to foster the development of radical innovations in spite of the fact that both me‐too and incremental innovations are also related to innovation performance represents an interesting contribution. Applying a framework that was based on the development of new products and innovations in the manufacturing context to the service context represents a contribution to the extant literature. Finally, investigating the link between innovation types, innovativeness, management practices and innovation performance in service companies is pioneering.