Profiting from service innovations can be challenging. It is not only a question of pricing and marketing the services appropriately, but also of keeping competitors from imitating them. The purpose of this paper is to discuss how service innovation differs from technology/product innovation in terms of protection, and how this shows in collaborative innovation activities.
The paper offers a literature review combining discussion related to service research and strategic management. Empirical evidence is provided in the form of a multifaceted case study illustrating some of the aspects of collaborative service innovation.
The results indicate that characteristics separating service innovations from product or process innovations influence the efficacy of protection. This, in turn, may make or break the subsequent value appropriation. Furthermore, as service innovation typically includes collaborative activities, there is another twist to protection: companies must protect knowledge that brings them competitive advantage, but on the other hand they need to foster knowledge sharing, which may be in conflict with protective measures. As a result, service innovators cannot rely solely on intellectual property right strategies, as their counterparts working with products might do, but the service element requires taking a wider look around, and utilizing means such as human resource management, lead time, and contracting.
The novelty of this paper lies in its analysis of two very recent trends: collaboration (and coopetition) in innovation, and the tendency to introduce business models that bring service innovations to the core of the offering. Augmenting prior knowledge, the paper brings forth issues that need to be acknowledged when service innovations are created, protected, and appropriated.
