Radical Versus Incremental Innovation: The Importance of Key Competences in Service Firms

Abstract

Today, innovation often takes place using open practices and relies on many sources for knowledge and information. The purpose of this article is to study how different knowledge-based antecedents influence the ability of service organizations to innovate. Using data about the Norwegian service sector from the 2010 Community Innovation Survey, we examined how three types of competence, namely R&D activities, employee-based activities, and customer-related activities, influence the propensity of firms to introduce radical or incremental innovations. The results show that R&D-based competence is important for service firms when pursuing radical innovations, whereas employee-based activities such as idea collaboration are only found to influence incremental innovations. The use of customer information was found to be an important driver for both radical and incremental innovations. The findings points to managerial challenges in creating and balancing the types of competence needed, depending on type of innovation targeted by an organization.