Developing Service-Based Business Models: Which Innovation Capability for Which Innovation Dimension?

Abstract

It is widely understood that firms innovate by altering their business model rather than only changing a particular technological aspect of their offerings. In many cases, also for manufacturers, actual value is being created through the provision of services. What has remained underexplored so far is the question of which innovation capabilities are most needed when developing a service-based business model. In this chapter, we discuss how both the concept of service innovation and the concept of business model innovation are variations of evolutionary theories typically applied only to technology. Using a large-scale survey, we test hypotheses regarding the co-occurrence of six (also evolutionary inspired) innovation capabilities on the one hand and changes in five particular business model dimensions on the other hand. Simultaneously regressing the capabilities on these dimensions confirms their distinctiveness, as each capability is linked to one or more dimensions. Our effort to combine two frameworks brings a vocabulary, mapping tools, measurement basis and empirical evidence on distinct patterns in the interlinkages between organizational capabilities and innovation outcome. These contributions can provide management guidance to organizations aiming to develop innovative service-based business models.