How To Resolve The Service Innovation Dilemma In Manufacturing Firms:the Role Of Boundary-Spanning Search

Manufacturing firms face an important dilemma in service innovation:because of the different characteristics between products and services, the accumulated knowledge in product innovation is unable to meet the needs of the service innovation, and even forms capability rigidity to impede service innovation. Given the importance of service innovation for manufacturing firms, it is imperative to examine how to develop new services. Yet, innovation research remains dominated by research that is focused on products and systems rather than on services. Thus how to resolve service innovation dilemma in manufacturing firms becomes a critical research question.In this paper, we argue that the boundary-spanning search provides a key to this dilemma. Previous researches focus on the effect of technology search on innovation, largely ignoring market search. However, service involves close interaction with customers, in that customers are often the source of new service. Thus, large market knowledge must to be involved to develop a service innovation and market search may play a more important role in service innovation. Thus this study aims to simultaneously examine the impacts of technology search and market search. In addition, external environment is an important factor to affect the value of boundary-spanning search. Because environmental uncertainty and industry competition are the main environmental characteristics under the background of Chinese economic transition, we examine if the effects of technology search and market search are moderated by environmental uncertainty and industry competition. We conduct an empirical research using an original data set of230manufacturing firms in Suzhou Industrial Park. Following results are obtained. First, the boundary-spanning search of technology knowledge and market knowledge can both promote service innovation of manufacturing firms. Second, we find that external environment is an important factor to affect the value of boundary-spanning search. With the rising intensity of industry competition, the role of the boundary-spanning search of technology knowledge is enhanced in promoting service innovation. However, industry competitive intensity does not significantly moderate the relationship between market search and service innovation. In addition, with the improvement in the level of environmental uncertainty, the role of the boundary-spanning search of market knowledge is enhanced in promoting service innovation. Environmental uncertainty, however, does not significantly moderate the relationship between technology search and service innovation.