Purpose: The purpose of this paper is to present the first empirically tested model showing that internal marketing (IM) is a factor of success in new services development. It attempts to bridge internal market orientation (IMO) - the philosophical background of IM programs - with successful service innovations represented by new service performance (NSP). Design/methodology/approach: To explore the link between IMO and NSP a structural equations model was designed considering service quality and time-to-market as mediator variables. Data were gathered from business service firms' senior managers in Spain and Portugal (74 service companies based on a questionnaire). Findings: The results largely support the hypothesized theoretical relationship that organizational effort in the human resources area, supported by the marketing function and implemented through an IMO, is connected with increasing service quality and innovation success. Research limitations/implications: The results of this study are context specific. In addition, surveys usually present data collection problems such as composing questions properly, key informant bias and non-response bias. However, the actions undertaken - such as pre-testing coupled with personal telephone contact with managers and the good results obtained in verifying the representativeness of the sample - suggested that every effort was made to obviate the limitations. Practical implications: The results suggest that managers must ensure that internal aspects of management, such as internal communication and employee commitment, are taken into account in order to implement successful new services. Managers need to be more proactive, trying to include the marketing function in human capital issues. Understanding internal clients' wants and needs and selling company goals internally would make external efforts in developing a new service much more likely to succeed. Originality/value: Reflecting the literature which highlights the importance of the internal relationship between service employees and the company in service innovation, the paper pays particular attention to the role of IMO linkages and their effect on service innovation success. To the best of the authors' knowledge, this is the first time this relationship has been empirically tested. © Emerald Group Publishing Limited.
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