Strategy and process of value creation and appropriation in service clusters

Service-oriented networks and clusters of firms have increasingly become prevalent in recent decades. This new form of service clusters is different from the traditional industrial clusters in which the focus is primarily on costs, production, and channel distributions. We extend the research on service innovation, alliance networks, and industrial clusters to analyze the strategy and the process of value creation and appropriation in service clusters. Higher perceived customer value is created and delivered by a network of agglomerate firms dynamically engaged in value networking and service innovation. The proposed theoretical framework and innovation mechanism provide new insights for firms located in the service clusters to gain and sustain competitive advantages. It also offers a new perspective for policymakers to advance regional and global competitiveness.

► This research develops a conceptual framework for studying value creation in service clusters.
► Two types of regional service clusters are defined and characterized.
► The framework examines the strategy and the process of creating and capturing value by service firms.
► Value is created through a network of agglomerate firms engaged in networking and innovation.
► The framework and innovation mechanism provide new insights for managing service innovation.