Market Orientation, Internal Process, and External Network: A Qualitative Comparative Analysis of Key Decisional Alternatives in the New Service Development*

Abstract

Scholars from different disciplines acknowledge the importance of studying new service development (NSD), which is considered a central process for sustaining a superior competitive advantage of service firms. Although extant literature provides several important insights into how NSD processes are structured and organized, there is much less evidence on what makes NSD processes successful, that is, capable of contributing to a firm's sales and profits. In other words, which are the decisions that maximize the likelihood of developing successful new services? Drawing on the emerging “service‐dominant logic” paradigm, we address this question by developing an NSD framework with three main decisional nodes: market orientation, internal process organization, and external network. Using a qualitative comparative analysis technique, we discovered combinations of alternatives that maximize likelihood of establishing a successful service innovation. Specifically, we tested our NSD framework in the context of hospitality services and found that successful NSD can be achieved through two sets of decisions. The first one includes the presence of a proactive market orientation (PMO) and a formal top‐down innovative process, but the absence of a responsive market orientation. The second one includes the presence of both responsive and PMO and an open innovation model. No single element was a sufficient condition for NSD success, though PMO was a necessary condition. Several implications for theory and decision‐making practice are discussed on the basis of our findings.