This study examines how B2B service firms organize and manage knowledge in order to deliver new value adding solutions and in turn competitive advantage, addressing calls for research into this important, yet neglected area. Specifically, this study: (1) examines the role of the antecedents of knowledge integration capability (KIC) in service innovation-led competitive advantage in project-oriented B2B service firms; and (2) models and empirically tests the links between KIC and service innovation, and in turn sustainable competitive advantage (SCA). Findings from our research of Australian and US project-oriented firms support our central theorization that the new knowledge acquired through external and internal sources per se is not sufficient, but should be integrated with existing knowledge in order to deliver innovative service solutions addressing clients' needs. Results from testing non-linear effects of new knowledge configurations on service innovation provide deeper insights into the suggested relationship. Our research contributes to calls for comprehensive frameworks of service innovation-led competitive advantage. We provide theoretical and managerial implications, and suggest areas for future research.
With increased fragmentation of markets and more demanding customers, service providers are shifting focus to providing client-focused, innovative solutions designed to deliver greater customer value and sustained competitive advantage (SCA). Caterpillar, Michelin and Rolls-Royce are examples of business-to-business (B2B) firms who understand the importance of client focused innovative solutions (Windler, Jüttner, Michel, Maklan, & Macdonald, 2017). This shift is well recognized in the services literature (c.f. Berry, Shankar, Parish, Cadwallader, & Dotzel, 2006; D'Antone & Santos, 2016; Storey, Raddas, Burton, Zolkiewski, & Baines, 2016). Scholars are only now starting to examine knowledge resources and mechanisms underlying service innovation-led competitive advantage (e.g., Kang & Kang, 2014; Windler et al., 2017), as knowledge resources are arguably of critical importance to innovation (Zhou & Li, 2012). The growing service innovation research highlights that pathways for service-related knowledge differ from goods-related knowledge (c.f., Höber & Schaarschmidt, 2017; Schaarschmidt, Walsh, & Evanschitzky, 2017). Yet, despite recognition that important differences exist between goods-based firms and service firms, and the heightened interest by both scholars and practitioners alike, how B2B service firms organize and manage knowledge in order to deliver new value adding solutions, and the link to competitive advantage, remains unclear (Storey & Kahn, 2010). Further, while advancements in the broader service innovation literature provide a useful starting point, prior service innovation literature has largely focused on financial contexts (de Jong & Vermeulen, 2003), highlighting the need for alternative rich contexts (Candi & Kahn, 2016; Ordanini & Parasuraman, 2011). We address calls to develop and test more comprehensive models of service innovation, capturing antecedent factors that drive service innovation in B2B service settings (Bharadwaj, Varadarajan, & Fahy, 1993; Johne & Storey, 1998).