Transforming from service providers to solution providers: implications for provider-customer relationships and customer-induced solution innovation

Abstract

Abstract:There is a rich body of literature investigating the integration of customers into innovation processes. The various strands of this literature converge on the notion that integrating customers creates access to use-related knowledge that is needed to better target future customers. In a similar vein, solution selling has emerged as a means to provide solutions that fulfil customers' demands as an alternative to selling products and services to an unknown, anonymous customer. Here, most research adopts a producer-centric view. Yet, little research exists that: 1) combines customer integration and solution selling; 2) considers service companies. Thus, the authors' aim was to investigate whether and how a transformation from being a service provider to being a solution provider influences the provider's relationship with the customer, affects customer-induced service and solution innovation, and shapes the provider's absorptive capacity. The authors employ a case study design and investigate a German medium-sized IT consulting firm. The main result is the identification of testable propositions stemming from expert interviews and additional company data. At the end of the article, the authors discuss theoretical and managerial implications.

Customer Interaction and Innovation in Hybrid Offerings

“…Perhaps due to these opposing theoretical viewpoints, the pathways by which customer knowledge affects innovation outcomes have not been completely mapped, especially in hybrid offerings contexts, in which the pathways for service-related knowledge likely differ from those for goods-related knowledge (Höber and Schaarschmidt 2017). Therefore, we offer a more unifying innovation-related conceptual framework.…”

“…For example, if a manufacturer customizes maintenance services by providing different service-level agreements to different customers, the firm learns how customers react to these service bundles but cannot enlarge its level of technological knowledge. In other words, service-related customer knowledge that is generated through service customization is difficult to harness for goods development (Höber and Schaarschmidt 2017). Thus, service customization might have different effects for goods- and services-related elements of hybrid offerings when goods-centric firms start to build additional service customization capabilities.…”