Customer Role in Service Production and Innovation – Looking for Directions for Future Research

Abstract

Preface Intensive research on service innovation is a relatively recent phenomenon. Hence, it is natural that much effort has been devoted to identifying general characteristics of service innovation. A key feature has been argued to be the role of customers as an important resource in service development. This document consists of two working papers that review and analyse customer – service provider interaction in service production, and in service innovation activities. The focus of the analysis is on business customers. As the number of studies in the field has been rapidly growing, knowledge of customer potential and limitations in service innovation is also increasing. However, literature in the field remains fragmented. The purpose of the review is to organise existing research findings and point out key directions for future research efforts. In other words, to examine the current knowledge about customer roles in service innovation, and the existing knowledge gaps that would deserve more attention. The review identifies key themes and research findings, as well as provides a conceptual framework that integrates factors (and suggests interdependences) that seem to influence customer role in service innovation. The first one of the papers is titled “Customer roles in service production – implications for involving the customer in service innovation” (Arja Kuusisto). It first delineates customer participation in service production. Three distinct customer roles are identified: consuming, coperforming, and co-creating a service. These customer roles are then analysed in terms of their implications for customer motivation and capabilities to become involved in service innovation. Overall, the analysis shows that there is a need to take into account the specific innovation context: customer motivation and capabilities to contribute to innovation activities depend on the specific innovation target and resources of the customer as well the service provider. The second paper, “Customer interaction in service innovations – A review of literature” (Seliina Päällysaho), identifies key themes that can be used to structure discussion and findings in the field. These include, customer as a resource and as a co-producer in service development, collaboration patterns between customer and service provider, customer input in various types of innovations and at various stages of the innovation process, selecting and motivating customers, and, the pros and cons of customer input in service innovation activities. A key finding of the review is that despite the growing number of studies, research results yield only very few generalisations. This is due to the heterogeneity in questions asked, concepts used, and the nature of service activities examined which make it difficult to compare results of one study with another. The review and analysis conducted in the two working papers suggest the following guidelines for future studies on customer role in service innovation: 1. The type of the analysed service is important and it needs to be clearly identified. It is not a new observation that service activities are heterogeneous. However, it seems that what we know about customer involvement in service innovation does not adequately reflect this heterogeneity, but is biased towards what we know about services produced in intensive, person-to-person interactions. Hence, more research is needed to examine the variety of services. Further, there should be more studies that examine different types of services in one study (or with the same conceptual framework and research questions) to enhance comparability of findings. 3 2. There is a need to specify the target (or key dimension) of innovation. The following dimensions of service innovation are often identified: new or significantly improved service, process of production or delivery, organisational method, and marketing practice. However, this specific target of innovation has not been systematically looked into in studies focusing on customer involvement in service innovation. It is highly plausible that customer roles and potential in service innovation are closely linked to the type of service innovation in question. 3. There is a need for more studies on how to organise and motivate customer interaction in service development. Research on the following types of questions should contribute to innovation management practices: When should customer interaction in a service development project be separately governed and organised? How can the firms – service providers and customers – make use of formal and informal protection methods in service co-development projects? As the service provider and the customer may have different motivations for service development, would it be possible to create new types of ‘win-win’ incentives for co-operation in innovation activities? What types of incentives are currently in use for internal employees and for the customer organisation’s employees, and how they are perceived? 4. What is the role of customers when the service provider aims to proactively anticipate or even influence future customer needs? It is hoped that the following two research papers presented here can be valuable for readers in two ways: that they help organise current knowledge on customer role in service innovation and provide plentiful references in the field, as well as give rise to new relevant research questions.