Co-production and its effects on service innovation

This study explores the influence of business-to-business (i.e., upstream) co-production on service innovation in the information technology (IT) industry, and examines the antecedents of co-production, based on a survey of sales managers, the seller side of the co-producers, from 157 IT businesses in Taiwan. The findings indicate that co-production positively influences service innovation to a degree that depends on the collaborative partner's compatibility and history of business relations, affective commitment, and expertise. Moreover, the business' innovation orientation enhances (moderates) the relationship between co-production and service innovation. These results have several managerial implications. Businesses should choose co-production partners that are compatible and can contribute toward advancing the relationship. Furthermore, investments in building their innovation orientation will strengthen their efforts in service innovation through co-production.

Research Highlights► A survey of 622 IT businesses was used to validate a model of service innovation. ► Partner match, partner expertise and affective commitment improve to co-production. ► Innovation orientation enhances co-production's effects on service innovation. ► A business' size positively contributes to its innovativeness. ► Good co-production practices lead to increased service innovation.