The influence of service innovation practices on business performance

Abstract

This study examined the influence of service innovation practices on business performance which has received limited attention in academic literature. Complexity Theory served as the underlying conceptual lens that enabled this research to answer the research questions and attain the research objectives. This study introduced environmental dynamism and environmental competitiveness as potential moderators on the relationship between the service innovation practices and business performance of South African motor vehicle retailers. A mixed research method was used to gain an in-depth understanding of the implementation of service innovation practices in service organisations, to determine the influence of these service innovation practices on business performance, and to determine the potential moderating role of the environmental factors (environmental dynamism and environmental competitiveness). In-depth interviews and self-administered questionnaires were used to collect the primary data during the qualitative and quantitative phases, respectively. The Atlas.ti Version 8 software program was used in the content analysis to analyse the qualitative data. Both descriptive and regression analysis methods were used to analyse the quantitative data using the statistical software package SPSS Version 25. The internal consistency reliability of the measurement scales was assessed using Cronbach's alpha values. This study used the structural equation modelling statistical technique to conduct confirmatory factor analysis on variables of interest with the aid of the Amos software package. This study uncovered the key drivers of service innovation practices, the types of service innovation practices being implemented, and how these service innovation practices are planned and implemented. In addition, this study revealed the barriers that hinder the planning and effective implementation of service innovation practices. Moreover, the results of this study revealed the positive relationship between service innovation practices and business performance (profit growth/maximisation, organisational competitiveness, and organisational reputation. Furthermore, the results of this study affirm the moderating role of environmental competitiveness on the relationship between service innovation practices and profit growth/maximisation, and that there are no moderating effects on organisational competitiveness and organisational reputation. Lastly, the results of this study revealed that environmental dynamism does not have moderating effects on the relationship between service innovation practices and business performance (profit growth/maximisation, organisational competitiveness, and organisational reputation. These results provide significant contribution to theory and service innovation literature by demonstrating that organisations operating in a developing such as South Africa can achieve improved business performance through implementation of service innovations. This study provides recommendations to stakeholders in the motor vehicle industry and future research directions.