Value Co-Creation in Engineering Service Innovation: Resources and Capabilities Perspectives

Abstract

Purpose: This research focuses on firm resources and capabilities used for value co-creation in service innovation. Specifically, I investigated how service innovation is created in an international engineering company. The aim of this article is to reveal what resources and capabilities are employed by a service provider for value co-creation in the innovation project of engineering service and how they vary in particular stages of this project. Methodology: The research is based on qualitative methodology by a multi-case study strategy. Focus group discussion with senior managers and semi-structured interviews with project managers of the studied international engineering company were used as concrete data gathering methods. Findings: The research revealed eight value co-creation activities accomplished by the engineering company and client during the engineering service innovation project. The activities are as follows: co-identification of the client's problem, co-evaluation of ideas, co-defining of client's requirements, co-analysis of environment, co-design, co-testing, and co-adoption, co-production, and co-activities after the launch. These activities are diffused in different project stages and demand a range of resources: expert knowledge, diagnostic, communication skills, trust, experience, technological equipment, human resources. Moreover, they require diverse capabilities: relational, innovative, analytical, negotiation, knowledge absorptive, planning, organizational flexibility, and cross-cultural. The intensity and variety of using the mentioned resources and capabilities differ relying on the value co-creation activity. We hope these findings will represent a step toward a more coherent resource-based view (RBV) and service innovation theories. Implications: The study involved only one Lithuanian engineering company, so the research context may influence the findings. Another limitation is related to the small number of cases and research participants. Originality: Unlike previous studies that revealed the importance of single resources and capabilities for service innovation, this study determined the range of resources and capabilities employed in different activities of engineering service innovation project stages, especially in the value co-creation activities performed by the engineering company and clients. Moreover, research also identified how resources and capabilities vary at different stages of these projects.