Abstract
Service innovation and service productivity are key elements of a firm’s ability to gain competitive advantages. Although previous studies have advanced the understanding of each topic individually, few attempts have been made to bridge the gap between the two research streams. Endeavoring to explain how firms combine strategies for high service productivity with successful service innovation, we adopt a multiple-case research design. Results of a one-year field study in the financial services market show that firms are more likely to gain competitive advantages if they link multiple innovation configurations that fit with their productivity strategy. We identified 27 cases that facilitated productivity through cost emphasis, revenue emphasis, or a dual emphasis on both cost and revenue. Our data, which include 42 in-depth interviews as well as public documents, also suggest that two sets of service innovation configurations—new service development and service design—are linked together in relationships with service productivity.