Enabling service innovation: A dynamic capabilities approach

The point of departure for this article is the need for product-centric firms to compete in the market by adding services to their portfolio, which requires a greater focus on service innovation if they are to remain competitive. A major challenge associated with the shift from product-centeredness to a productand-service orientation is the management of the essential dynamic capabilities of sensing, seizing, and reconfiguring needed for service innovation. The research study reported identifies key microfoundations forming the basis of successful realignment of a firm's dynamic capabilities so as to achieve a better fit with service innovation activities. Eight qualitative case studies of product-centric firms form the basis of the study. The findings make three primary contributions to the body of knowledge. First, they extend the existing literature on dynamic capabilities by specifically discussing microfoundations related to service innovation. Second, the study extends existing work on service innovation into the manufacturing industries by identifying the key microfoundations in that context. Third, the research provides empirical evidence of dynamic capabilities in practice, especially in product-centric settings in which the service context is novel. (C) 2012 Elsevier Inc. All rights reserved.