The perils of pleasing: Innovation-stifling effects of customized service provision

Matthijs J. Janssen (Corresponding author), Koen Frenken, Elena M. Tur, Alexander S. Alexiev

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Samenvatting

Sensing customer needs capabilities generally help firms to utilize customer feedback. Yet, as research linking micro-economics to industrial dynamics has shown, a strong focus on such feedback may prevent an adequate response to more promising market developments. We analyse this tension for firms providing customized services, whose innovativeness heavily depends on customer input. By drawing upon an NK search model, we simulate various interactive search strategies. Our simulations result in hypotheses concerning the strategies’ relation to innovation-based turnover. We use survey data from 292 firms to substantiate our expectations empirically. Both our simulation and regression results point to a positive influence on turnover of sensing customer needs and of customer feedback. While the interaction effect is positive for non-customizing service providers, it is negative for their customizing counterparts. The latter group may fail to exploit their inventiveness, as they concentrate on tuning new services to the specific needs of existing customers rather than turning them into more widely marketable innovations.

Originele taal-2Engels
Pagina's (van-tot)1231-1264
Aantal pagina's34
TijdschriftJournal of Evolutionary Economics
Volume32
Nummer van het tijdschrift4
Vroegere onlinedatum2 aug. 2022
DOI's
StatusGepubliceerd - sep. 2022

Bibliografische nota

Publisher Copyright:
© 2022, The Author(s).

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