Purpose This study aims to identify conditions under which service innovation is positively or negatively related to firm performance. Design/methodology/approach Based on Teece's (1986) profiting from innovation (PFI) framework, the present study examined the moderating effects of the degree of service economy, technological turbulence, market orientation, frontline employee commitment, leadership, and learning orientation between service innovation and firm performance. Specifically, this study conducted meta-analytic research on 198 independent samples from 72 studies via meta-regression and subgroup analysis. Findings Service innovation is positively related to firm performance, particularly pronounced in nations with a low degree of service economy compared to those with a high degree. Moreover, we observe a nuanced shift after the COVID-19 pandemic, where the positive effect of service innovation on firm performance diminishes in nations with a lower degree of service economy, while it becomes more pronounced in nations with a higher degree. Furthermore, when a service company does not have a strong market orientation, effective leadership, or committed frontline employees, service innovation does not increase firm performance. Research limitations/implications The number of sample studies in certain subgroup conditions is small. For example, there were only three sample studies in the strong learning orientation group. Future research should examine the moderating effects of the moderators when a sufficient number of sample studies in this field have accumulated. Practical implications Service companies can benefit more from service innovation in a nation with a low versus high degree of service economy before the COVID-19 pandemic, but less so after the pandemic. Additionally, service companies must prioritize market orientation and build effective leadership and strong employee commitment before initiating service innovation. Originality/value The results enrich our understanding of the relationship between service innovation and firm performance by clarifying the conditions under which service innovation may increase or decrease firm performance.
Wei et al. (Fri,) studied this question.