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What makes a manufacturing firm effective for service innovation? The role of intangible capital under strategic and environmental conditions

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  • Cheng, Colin C.J.
  • Krumwiede, Dennis

Abstract

While an increasing body of research addresses the importance of service innovation to manufacturing firms, little work has examined what makes a manufacturing firm effective for service innovation, and under what strategic and environmental conditions. This article investigates (1) what types of intangible capital are necessary for a manufacturing firm to develop new services, (2) whether a focus on an intangible capital will have the greatest effect on new service success, and (3) whether the effectiveness of a specific intangible capital varies from the combined conditions of strategic flexibility and environmental uncertainty. Building on service-dominant logic, this study theorizes that the four types of intangible capital (market, service delivery, interaction, and learning) are necessary for manufacturing firms to create superior new services. The authors test their hypotheses with a sample of 293 matched responses collected from leading manufacturing firms. The results indicate that all four types of intangible capital have significant positive relationships with new service success. However, not all intangible capital is equally effective as to which learning capital has the strongest effect across four combined conditions of both high and low levels of strategic flexibility and environmental uncertainty. This study contributes to the manufacturing literature by shedding light on a neglected construct (intangible capital), and offering valuable insights for manufacturing managers seeking to determine when (high/low environmental uncertainty) and how (high/low strategic flexibility) firms' intangible capital should be emphasized, in order to achieve the greatest effectiveness of service innovation.

Suggested Citation

  • Cheng, Colin C.J. & Krumwiede, Dennis, 2017. "What makes a manufacturing firm effective for service innovation? The role of intangible capital under strategic and environmental conditions," International Journal of Production Economics, Elsevier, vol. 193(C), pages 113-122.
    • Handle: RePEc:eee:proeco:v:193:y:2017:i:c:p:113-122
    DOI: 10.1016/j.ijpe.2017.07.007
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    References listed on IDEAS

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    7. Guowei Li & Zhe Luo & Muhammad Anwar & Yuqiu Lu & Xiantao Wang & Xuening Liu, 2020. "Intellectual capital and the efficiency of SMEs in the transition economy China; Do financial resources strengthen the routes?," PLOS ONE, Public Library of Science, vol. 15(7), pages 1-25, July.

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