Dynamic capability building in service value networks for achieving service innovation

Renu Agarwal, Willem Selen

    Research output: Contribution to journalArticlepeer-review

    279 Citations (Scopus)


    Service organizations increasingly create new service offerings that are the result of collaborative arrangements operating on a value network level. This leads to the notion of "elevated service offerings," our definition of service innovation, implying new or enhanced service offerings that can only be eventuated as a result of partnering, and one that could not be delivered on individual organizational merits. Using empirical data from a large telecommunications company, we demonstrate through structural equation modeling (SEM) that higher-order dynamic capabilities in services are generated as a result of collaboration between stakeholders. Furthermore, it is through collaboration and education of the stakeholders that additional higher-order capabilities emerge (customer engagement [CuE], collaborative agility [CA], entrepreneurial alertness [EA], and collaborative innovative capacity), all of which influence the service innovation outcome. Our study also reveals empirical evidence for an ongoing process of continuous dynamic capability building in accordance with the changing dynamics of business. Managers of service organizations should recognize the potential embedded in these higher-order skill sets, starting from collaboration, learning, and management of creative ideas for both strategic and operational benefits. Moreover, the capabilities of CA, EA, and CuE are even more important in managing the flexibility, timely delivery, and reliability of service offerings. Managers should take measures to inculcate, promote, and manage these dynamic capability skill sets to foster innovation in services.

    Original languageEnglish
    Pages (from-to)431-475
    Number of pages45
    JournalDecision Sciences
    Issue number3
    Publication statusPublished - Aug 2009


    • And structural equation modeling
    • Collaboration
    • Construct development
    • Dynamic capability building
    • Innovation in services
    • Service value networks

    ASJC Scopus subject areas

    • General Business,Management and Accounting
    • Strategy and Management
    • Information Systems and Management
    • Management of Technology and Innovation


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