An Entrepreneurial Approach to Service Innovations: Leading Changing Lifestyles in Japan

Despite Japan’s recent increased shift to a services economy, it has been pointed out that the Japanese service industries are lagging in productivity and competitiveness, compared to its manufacturing industries and also to non-Japanese service companies. Interestingly, it is within these very domestically-oriented, entrenched industries that we can observe an increasing number of service innovation examples that have succeeded in creating new value for customers. In this paper, we focus on how such stodgy industries, which were long thought to have low productivity and insufficient competitiveness, provide an optimal sphere for spawning entrepreneurial service innovations. Our research questions are two-fold: (1) How do opportunities for service innovation emerge in the industries that were long considered to be lacking innovations?; (2) How do entrepreneurs capture such opportunities and turn them into businesses that create new customer value? Building on the insights gained through field research on companies such as BOOKOFF in the second-hand book industry, Studio Alice in the photography studio industry, Next Japan in the amusement industry, and Urban Funes in the funeral home industry – companies that have taken on the challenge of changing customer value rooted in everyday life – we intend to develop a conceptual framework around the key construct “co-creation of value.” Recent development in the field of service management will be reviewed and implications for practice and theory will also be discussed.