Nardelli, Giulia Roskilde University, Denmark
Abstract
Services are characterized by the involvement of stakeholders in the innovation process. The aim of this study is to understand how, in the context of facility services, value co-creation unfolds throughout open business model innovation processes. An explorative study was carried out in the Danish field of facility services, and complemented with three mini-case studies and archive research. The results highlight how value co-creation unfolds throughout processes of open business model innovation due to the intertwining of the business model of an organization and its stakeholders. Open business model innovation, therefore, does not only imply reacting to changes in other stakeholders’ business models, but rather actively involving stakeholders in the business model innovation process.
Introduction
Services are a major part of economic activities and employment in most economies of developed countries (OECD, 2005). Nevertheless, due to the hectic dynamics of contemporary economies, service offerings and the organizations behind them need to be continuously re-invented, and innovation has become a crucial element of survival and growth (Chesbrough, 2011). While services and tangible goods have been proven to share some common features when it comes to innovation, existing literature stresses that new product development models cannot be applied as such to innovation in the service context, which rather requires dedicated research (Bryson, Rubalcaba, & Ström, 2012; Gago & Rubalcaba, 2006). One of the distinguishing features of services as compared to tangible goods is the simultaneity of the production and consumption process, which implies co-production between the providers and the customers (Hertog, Aa, & Jong, 2010). In addition, customers are always co-creators of value: the value is not embedded in goods or services but emerges when individual goods and services are linked to other resources in the use context (Nenonen & Storbacka, 2010; Vargo & Lusch, 2004).
Therefore, to ensure survival and sustained growth in the contemporary hectic economies, service providing organizations should make sure to actively interact with stakeholders throughout their innovation process, be they aimed at developing new offerings or the organizational processes behind existing ones (Alam & Perry, 2002; Hsueh, Lin, & Li, 2010; Prahalad & Ramaswamy, 2004b; Vargo & Lusch, 2004). The active interaction with stakeholders during innovation processes, in fact, may lead to increased customer satisfaction; services with lower failure rates; better relationships with partners, suppliers and competitors; and, eventually, increased competitive advantage and service innovation performance.
According to a recent stream of research, however, active interaction with stakeholders concerns—and needs to be supported with regards to—more than the innovation of the service offerings or related organizational processes. More broadly, active interaction with stakeholders should also involve the continuous and open innovation of the business model behind such offerings and organizations (Chesbrough, 2011; Teece, 2010), where the business model is defined as the depiction of the ways the organization creates, delivers and captures value (Amit & Zott, 2001; Chesbrough & Rosenbloom, 2002; Doz & Kosonen, 2010). At the same time, recent service-focused literature depicts new ways of thinking about innovation in the service context, and stresses the importance of investigating, among others, business model innovation (Carlborg, Kindström, & Kowalkowski, 2014; Rubalcaba, Gallego, & Hertog, 2010; Toivonen & Tuominen, 2009). Business model innovation, nonetheless, appears to still be under researched in the service industries (Bryson et al., 2012; Nair, Paulose, Palacios, & Tafur, 2013), as well as the openness of the related processes. This suggests that, despite the recognition of the role of co-production and
value co-creation within innovation in the service industries, it is yet to be depicted how, in services, value co-creation might unfold during business model innovation.
This paper aims to fill in this gap by adopting a dynamic approach to investigate open processes of business model innovation in the context of service providing. More specifically, this study looks at business model innovation processes in facility services, a set of business-to- business support services, which was lately interested by an emergent process of professionalization (Jensen, 2010; Jensen et al., 2012) that triggered open business model innovation across facility service providing organizations. This context thus offers the opportunity to investigate open business model innovation processes in different service providing organizations, cases and situations, thereby strengthening the internal validity of the study (Yin, 2009).
To summarize, the purpose of this paper is to investigate how, within the facility service context, value may be co-created through stakeholder interaction during processes of open business model innovation. The analysis is thus centred on the following research question: How does value co-creation unfold throughout open business model innovation processes within the context of facility services?
In short, this paper argues that, within the facility service context, relationships among and between stakeholders evolve along with the business model innovation through the development of personal relationships, trust, and better awareness of each other’s business models. In other words, the business model innovation processes of an organization and its stakeholders are intertwined, and influence each other’s development through value co-creation. Open business model innovation, therefore, does not only imply reacting to changes in other stakeholders’ business models, but rather actively involving stakeholders in the business model innovation process.
This paper is structured as follows. Firstly, the research area; the motivations behind the investigation; and the research question were presented in the introduction. Secondly, the theoretical background depicts the existing literature on the topic of analysis, while a section dedicated to the empirical context poses the grounds for the empirical analysis of the data. In the methodology section, the research methods and the procedures that followed throughout the research process are described. The findings are then introduced and the results discussed. Finally, the conclusions explicitly answer the research question and delineate the limitations of this study and an agenda for future research.