Digitalization Capability and Service Innovation From the Knowledge-Based View

Abstract

This study aims to examine the relationship between digitalization capability and service innovation in manufacturing firms. Particularly, this study probes into the indirect effect of digitalization capability on service innovation through customer knowledge development and knowledge integration. The study was based on analyzing data collected through a questionnaire survey on Chinese manufacturing firms. Partial least squares structural equation modeling was applied to test the hypotheses. The results show that digitalization capability has positive effects on incremental and radical service innovation in manufacturing firms. The relationship between digitalization capability and incremental service innovation is positively mediated by the depth of customer knowledge and knowledge exploitation but negatively mediated by the diversity of customer knowledge. In addition, the relationship between digitalization capability and radical service innovation is positively mediated by the diversity of customer knowledge and knowledge exploration.