Innovation at the Service Encounter in Knowledge Intensive Business Services: Antecedents and Boundary Conditions

Abstract

The service encounter is the primary interface and critical nexus between frontline employees (FLEs) and customers, where service innovation evolves. In knowledge intensive business services (KIBS), FLEs' behaviors that support service innovation at the service encounter are especially important because FLEs have to engage in ad hoc innovation at that time. Ad hoc innovation means developing unplanned service solutions that can solve a customer's ill‐structured and complex problem. Although the central role of FLEs has been acknowledged, at present, we still know little about what supports their creativity and customer‐oriented behaviors that trigger ad hoc innovation. Drawing on data from 150 KIBS firms using a multiple informant design (three respondents per firm), findings show that both internal and customer communications increase FLEs' creativity and customer orientation. Further, the results show that FLEs' creativity and customer orientation are strongly related to ad hoc innovation developed at the service encounter. In focusing on the contingency effects of transactional leadership, the results show that transactional leadership moderates the relationship between FLEs' creativity–FLEs' customer orientation and ad hoc innovation differentially. This research provides theoretical and practical implications for scholars and practitioners through unpacking the contribution of enriched service encounter on ad hoc innovation.

Contemporary Issues and Critical Challenges on Innovation in Services

“…Siahtiri () addresses service innovation at the service encounter. The study adopts the view that service innovation does not happen in the R&D department but through interactions with customers as well as internal interaction in cross‐functional divisions.…”

“…Siahtiri () notes two very interesting areas for researchers to consider. One is to conduct longitudinal research to evaluate if ad hoc innovation results in service innovation over time.…”

“…One is to conduct longitudinal research to evaluate if ad hoc innovation results in service innovation over time. Siahtiri () believes this could be done by connecting service solutions delivered at the service encounter to radical or incremental service innovation introduced by knowledge intensive business service firms. Siahtiri () also suggests giving greater consideration to leadership and time constraints at the service encounter and their effects on ad hoc innovation.…”

Unlocking solution provision competence in knowledge-intensive business service firms

“…The provision of effective, tailored business service solutions to address business customers' problems is critical to success in competitive knowledge-intensive business services (KIBS) markets (Cabigiosu & Campagnolo, 2019;Chae, 2012;Siahtiri, 2018).…”

“…Some have seen solution provision as a relational process comprising the definition of the customer's problem, the design of tailored solutions, their deployment, and post-deployment customer support (Evanschitzky et al, 2011;Tuli et al, 2007). Others examine the role of organizational competences that help business service firms cooperate with customers (Friend & Malshe, 2016;Siahtiri, 2017) as well as knowledge and knowledge management (Aarikka-Stenroos & Jaakkola, 2012;Colm et al, 2020;Siahtiri, 2018), and engaging salespeople in solution provision (Panagopoulos et al, 2018). However, the literature has paid little attention to solution provision as a firm-level, multi-component competence that enables KIBS firms to develop and deliver effective solutions (Panagopoulos et al, 2018).…”